Property investors trickle back into the market

November 20, 2023

Property investors are trickling back into the market to capitalise on record-low vacancy rates around the country despite the prospect of higher interest rates.

New investor loans rose 2% in September and were 2.6% higher than the same time last year, according to the Australian Bureau of Statistics.

ABS head of finance statistics Mish Tan said the total value of investor loans had grown faster than owner-occupier loans between February and September of this year.

Mortgage Choice broker Christopher Ladley said investor lending had been trending upwards.

“I’ve seen quite a noticeable increase in the number of enquiries from new and existing clients who are suddenly interested in investment lending,” he said.

“There’s an increase in investor lending because people are seeing that vacancy rates are so low that if they buy an investment property, they won’t have any difficulty attracting a great tenant.


Investors are trickling back into the investment property market amid record-low vacancy rates. Picture: supplied

“Interest rates also appear to have stabilised or may potentially rise a little further, so a lot of people believe it makes sense to buy an investment property now.”

The national vacancy rate reached a record low of just 1.06% in October and was expected to decrease further unless more rental stock became available or new homes were built.

The much larger owner-occupier lending market was slightly lower in September, down 0.1% month-on-month, while first-home buyer loans increased 0.5% during the period.

Home lending remains significantly lower than the all-time highs seen during the Covid pandemic, however Mr Ladley said home lending levels were still higher than pre-Covid times.

Home building loans fall

There were 2,688 new home building loans in September, down 27.5% year-on-year, according to the ABS.

Lending to build and buy new homes were sitting at the lowest levels seen over the past two decades, according to the Housing Industry Association.

Australia’s home building industry has been recovering from a rapid rise in construction costs in recent years, which has blown out construction times and placed enormous pressure on home builders.


Home building lending is at the lowest levels seen over the past two decades. Picture: Getty Images

HIA senior economist Tom Devitt said new home lending activity had been weighed down by the fastest increase in interest rates in a generation.

In a widely expected move, the Reserve Bank of Australia raised the cash rate to 4.35% last week after higher-than-expected inflation in the September quarter.

The decision was a fresh blow to homeowners who had already seen their mortgage repayments skyrocket over the past 18 months.

The cash rate had been on hold at 4.1% since June, however the RBA had flagged further rate rises as a possibility.

Despite the prospect of even higher interest rates, home values have continued to march higher across the country.

The latest PropTrack Home Price Index showed that the national median home value climbed a further 0.36% in October to a new high, with price growth accelerating over the first few months of spring.






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