Powered by MOMENTUM MEDIA
subscribe to our newsletter

Investor market continues to thrive

Record-low rates and rising home values are continuing to draw investors into the market, according to RP Data.

Research analyst Cameron Kusher said that with interest rates likely to remain on hold for some time, investors are finding little value in keeping their money in the bank.

“With total rental returns from residential property of 17.6 per cent and 12.7 per cent in Sydney and Melbourne respectively, it is no shock that so many investors have shifted from cash into residential property,” he said.

“Although the rate of growth is slowing, growth remains, and until growth slows sufficiently and total returns also diminish, it is difficult to see how residential property won’t remain attractive to investors.”

Mr Kusher’s comments come after data from the Australian Bureau of Statistics (ABS) showed that lending by authorised deposit-taking institutions for investment purposes hit a new high in September, with $11.9 billion in finance commitments to investors over the month.

Advertisement
Advertisement

The ABS findings also showed that investors accounted for a record-high 41.4 per cent of total housing finance commitments during September.

Although regulators have flagged the possibility of introducing macroprudential tools to curb investor lending, Mr Kusher said that when compared to interest earned from savings, the total returns from residential property may continue to attract the interest of investors.

“Quite simply, if the goal is to slow residential property investment, macroprudential tools will need to work in such a way to make residential property far less attractive to invest or alternatively, investors need a viable and attractive alternative to property investment,” he said.

Mr Kusher noted the spike in investor lending coincided with a period of low mortgage rates.

“Of course, low mortgage rates occur in a concert with low interest rates which mean cash savings get low returns – as a result, investors push into other markets such as residential housing,” he said.

PROMOTED CONTENT


Investor market continues to thrive
mortgagebusiness

Latest News

The financial services regulator has released examples of how the incoming rules for add-on insurance will work for CCI, among other credit ...

The major bank has said that it is committed to the sale of its Pacific businesses despite a competition regulator knocking back their propo...

A prime residential lender has announced the pricing of one of its largest prime residential mortgage-backed securities to date. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.