Despite the prospect of rising interest rates, real estate investors are trickling back into the market to take advantage of record vacancy rates across the country..
The Australian Bureau of Statistics said new investor lending rose 2% in September, up 2.6% compared to the same period last year.
Mishu Tan, head of financial statistics at ABS, said total investor loans grew faster than owner loans from February to September this year.
Mortgage Choice broker Christopher Radley said lending to investors was on the rise.
“We have seen a fairly visible increase in the number of inquiries from new and existing customers who have suddenly become interested in investment financing,” he said.
“Investor lending is on the rise because vacancy rates are so low that people realize they will have no difficulty attracting quality tenants if they buy investment properties.
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With vacancy rates at record lows, investors are slowly returning to the investment property market.Photo: Attached
“With interest rates also looking stable or potentially rising a bit more, many people think it makes sense to buy investment property now.”
The national vacancy rate hit a record low of just 1.06% in October and was expected to fall further unless more rental inventory became available or new housing was built.
The much larger owner lending market fell slightly in September, down 0.1% month-on-month, while first home buyer loans rose 0.5% over the same period.
Although mortgage lending remains well below record levels seen during the COVID-19 pandemic, Radley said mortgage lending levels remain higher than pre-COVID-19 levels. Stated.
Housing construction loans decreased
According to ABS, the number of new home construction loans in September was 2,688, down 27.5% from the same month last year.
Financing for the construction and purchase of new homes remains at its lowest level in 20 years, according to the Housing Industry Association.
Australia's housebuilding industry is recovering from the sharp rise in construction costs in recent years, which has significantly lengthened construction times and put tremendous pressure on housebuilders.
Home construction financing is at its lowest level in 20 years.Photo: Getty Images
Tom Devitt, senior economist at HIA, said the fastest rate rise in a generation was weighing on new home lending activity.
In a widely expected move, the Reserve Bank of Australia last week raised the cash rate to 4.35% following stronger-than-expected inflation in the September quarter.
The decision is another blow to homeowners whose mortgage payments have skyrocketed over the past 18 months.
The cash rate has been unchanged at 4.1% since June, but the RBA has signaled further rate hikes are possible.
Despite the prospect of further interest rate increases, home prices continue to rise across the country.
Price growth accelerated in the first months of spring, with the national median home price rising an additional 0.36% in October to a new high, according to the latest Prop Track Home Price Index.
