A leading economist believes the “exaggerated” levels of investor home loans being written could be indicative of first home buyer demand.
Investors accounted for 49.7 per cent of total loans written in July, fuelling fears that the Australian property market is overheating.
The value of investment loans written in July grew 6.8 per cent while owner-occupied home loan growth remained flat, according to the Australian Bureau of Statistics (ABS).
But AMP Capital chief economist Shane Oliver says that some of the investor financing is being channelled towards first home buyers (FHBs).
“The investor share might not be quite as worrying as the figures suggest,” Mr Oliver told Mortgage Business.
“You can make an argument that some of that investor financing is actually first home buyers,” he said.
“If first home buyers have gone anywhere they have gone to the investor segment.”
FHB activity is now at a record low after falling to 12.2 per cent in July from 13.2 per cent in June.
However, there has been widespread speculation that the FHB figures supplied by the ABS are inaccurate.
An investigation by the ABS is now underway to evaluate the robustness of estimates of loans to FHBs.
“Concerns have been raised that under-reporting could occur if some lenders were only able to accurately report on those buyers receiving a first home buyer grant,” the ABS said.
Mr Oliver believes that the high level of investor activity and low level of FHB demand may reflect that state governments have tightened up the eligibility for FHB grants.
“In many states you have to buy a new dwelling to get the grant,” he said.
“So the amount of money to a FHB is less, so it is quite possible that FHBs might have decided that they won’t bother with the grant and just go in as an investor.
“There may be a degree of exaggeration in the investor number; it may be FHBs trying to get in via another route.”
Mr Oliver said this suggests that the high level of investor loans “may be a little bit frothier” than it looks.