Investor activity is on the rise across Australia, and brokers are tapping into the expanding pipeline to grow their revenue streams.
In the September quarter, investment lending for dwellings rose 13.6%, quarter over quarter, to 57,624 new investor loans, according to the Australian Bureau of Statistics (ABS). That's the largest number of investment dwelling loans on record, and equals approximately 12.3% growth annually.
"Falling borrowing costs and low vacancy rates are favourable conditions for investors," said Mish Tan, head of finance statistics at ABS.
Belinda Sugars, franchise owner and mortgage broker at Mortgage Choice Parkside, added that much of the demand is coming from investors moving across state lines.
"I've certainly worked with a few more investors recently, from interstate," the broker, who is based in the Adelaide area, but works with clients around the country, told Australian Broker. "And it's not just mums and dads; it's developers too. They're coming into places like Adelaide, because some of the land sizes here are pretty impressive, especially in the outer suburbs. So the investors are outpricing the major cities. People who know property and are in it for the long haul will be able to make money."
But with Australia's stubborn housing shortage, investment properties can be hard to come by. The result is many investors are getting creative in uncovering new opportunities.
Some buyers are linking up with real estate agents to get early alerts so they can be first in line when new properties hit the market, Sugars said.
"The people who are looking from interstate are pretty savvy," she explained. "The agents we work with tell us that they get a lot of inquiries from investors; they have investors on their books, investors who leave their names and contact information with the real estate agents and say they want to be contacted as soon as something comes up."
But Sugars added that investor interest isn't confided to South Australia.
"The investors follow their research and they tend to have a decent amount of knowledge behind them to see where the hotspots are and where the sleeper suburbs are in each capital city," she said. "It's not just Adelaide. There's a few other cities now. Perth is one that has been looked at heavily. Canberra is doing well; Darwin is looking at some good growth at the moment. So there's a few cities investors are interested in."
Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans, said in the last year there's been "an influx of buyers agents from down south and interstate investors purchasing up a lot of the cheaper stuff [on the market.
"We have this, sort of, second economy going on because our rent returns are so high for investors down south," Ashmore continued. "So a lot of the stock has been taken up by that."
Even Melbourne, previously showing signs of a slowdown, is now bouncing back with renewed growth. According to financial platform Money.com.au, investment loans in the state of Victoria grew 13% in the year leading up to September.
"The fundamentals are still there in Victoria, including improved rental yields, stronger population growth and more attractive price points in Melbourne, compared with Sydney, particularly across inner and middle-ring suburbs,” said Debbie Hays, property expert on Money's platform.
That's good news for investors chasing higher returns — and brokers hoping to capitalize off the market. But the dynamic also continues to push property prices higher, raising the bar for first-time homebuyers to enter the market, and still harder for others to trade up their current digs.
"Interstate investors, they'll do really well," Sugars said. "There's more opportunity for making more money."
