Investor activity making a market comeback

Investor lending has posted its largest annual increase since August 2014, rising by 27.3 per cent year-on-year, according to the latest figures from the ABS, RBA and CoreLogic.

ABS and RBA housing finance data for January showed that investors committed to a total of $13.8 billion in finance for investment properties, which represents a 4.2 per cent rise over the month and a 27.5 per cent increase year-on-year.

According to the latest CoreLogic Property Pulse, the RBA reported that there was $572.2 billion in investor credit outstanding to Australian lenders, which accounted for 34.9 per cent of all housing credit outstanding ($1.64 trillion) and 21.5 per cent of total outstanding credit.

CoreLogic research analyst Cameron Kusher said that these figures show a “significant rise” in investor housing credit: “In fact, two decades ago investor credit represented 21.8 per cent of total housing credit and 8.7 per cent of all credit”.

He elaborated: “With the substantial increase in dwelling values in Sydney and Melbourne over recent years, home owners are able to utilise the equity in their principal place of residence to purchase investment properties. However, while investor activity is rising, the proportion of total housing finance commitments to owner occupier first home buyers is at an historic low.

“Over the coming months, we expect to see further tightening of lending policies to investors with some lenders approaching APRAs 10 per cent speed limit. Should this occur, it is likely to result in a moderate slowing of demand from the investment segment, at least temporarily like we saw in mid-2015 and early 2016.”

According to CoreLogic, the value of investor housing finance commitments remains below its previous peak but has ramped up significantly over the past 12 months.

Mr Kusher said: “In fact, the value of investor housing finance commitments in January 2017 was just 5.3 per cent lower than its historic peak in April 2015.”

[Related: RBA prepared to intensify investor lending crackdown]

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