Investors riding property wave into 2021, says ABS

"Confidence has returned"

Investors riding property wave into 2021, says ABS


By Mike Wood

Investors are set to ride the ongoing property boom, according to the Australian Bureau of Statistics (ABS).

The ABS Lending Indicators displayed that, in January, there was a 9.4% rise in loan commitments made by investors. That number was part of a wider trend that has seen commitments rise by 22.4% over the course of the year.

Growth has been particularly strong in New South Wales, with the ABS charting the 6.7% rise in loan values in that state as making them as high as they have been since June 2018.

“Investors are seeing strong fundamentals, which ticks a lot of their boxes,” said Grant Foley, Director and Buying Agent of Grant Foley Property. “They’re seeing markets that are already starting to move for capital growth. They’re seeing very low cost of money, which helps their cash flow. They’re seeing rents starting to increase in some areas, which again helps their cash flow. And they’re seeing low vacancy rates which reduces risk.

With the property space rebounding so strongly after the COVID-induced slowdown, some are questioning whether the current record-breaking period is more of a blip than a full-on boom.

“Perhaps some investors that are siting on the sidelines share that view,” said Foley. “However, those who are active don’t share it. They’re seeing long-term opportunities and they’re really driven by the health and economic recovery from COVID-19. They’re seeing us come out the other side of the pandemic and they’re seeing the low cost of money, high buyer demand and low levels of supply.

Investors, according to Foley, are drifting away from the more uncertain world of the stock market and into Australia’s booming real estate sector.

Shares vs property comes down to personal circumstances, but certainly investors that I’m talking to are looking to change up their asset class mix and they’re citing property as a more stable assets class right now, which is a better fit with their personal risk profile.  Really simply, investors are more active this year than last year, confidence has returned.”

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