Investment loans dominate market

Investment property loans have grown by 37 per cent in four years while owner occupied loans grew by 4 per cent in the same period, according to Roy Morgan Research.

The Roy Morgan Research Consumer Single Source survey of approximately 50,000 people per annum found that the growth in investment property loans over the last four years has come predominantly from the 35 to 64 age groups, which account for 78 per cent of the increase.

According to the survey, 11.9 per cent of the 50 to 64 age group now hold an investment property loan (compared with 9.4 per cent in 2010) and 11.3 per cent of the 35 to 49 age group have one (up from 8.5 per cent).

“Going forward, government policy and the economic climate will play a major role in whether people choose to invest in the property market or take out a home loan,” Roy Morgan Research industry communications director Norman Morris said.

“Older Australians will face the prospect of cuts to pensions, and with the proposal for the pension age being increased to 70, this could impact the investment property market,” he said.

The proportion of those aged 50 and over with an owner-occupied home loan has increased with the greatest growth being in the 50-64 age group, up from 31.6 per cent to 34.0 per cent.

However the under-35 age group showed a decrease in the number and proportion with an owner-occupied home loan.

“Younger Australians may continue to find it difficult to enter the property market either for investment or owner-occupied because for both types they are competing with more cashed-up older property buyers,” Mr Morris said.

“The future of negative gearing, increased property investment by self-managed super funds and interest rates are some of the factors likely to play an important role in the attractiveness of borrowing for investment property in the future,” he said.

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