Investor activity still "in the doldrums" despite near-record loan values

Economist points to restrictive policies as an impeding factor

Investor activity still "in the doldrums" despite near-record loan values


By Micah Guiao

Even after home lending has passed its peak, investor activity remains subdued, according to Dr. Andrew Wilson, consultant economist at Bluestone Home Loans.

Although owner-occupiers and first home buyers have reported consistent declines in activity since May, investor lending continued to rise by 0.4% over October to $9.87 billion. This marks the third-highest value of lending to this group on record, behind only the $9.91 billion and $10.43 billion recorded in May and June 2015, respectively.

Still, the investor market share of total residential lending remains below its long-term average of 32.8%, falling from 42.5% in June 2015 to the current 29.1%.

“Although reviving, investor activity clearly remains in the doldrums, and with the national shortage of rental properties reflecting the restrictive policies of recent years pushes rents through the roof,” Wilson said.

Since June 2015, the high levels of investor activity drove the monthly value of owner-occupier and first-home buyer loans up by an astonishing 60% and 102.5%, respectively.

Wilson said this caused ARPA to place restrictions to reduce investor lending to relieve pressure on the escalating house prices and interest rates.

“Currently, however, investor activity remains low. Housing markets are clearly cooling as prices growth wanes – particularly in the primary investor markets of Sydney and Melbourne – and importantly the RBA continues to stipulate that interest rates will not rise until at least 2024,” Wilson said.

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