Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
Investor market continues to thrive

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.

Advertisement
Advertisement

“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.

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.

Investor market continues to thrive
mortgagebusiness

 

Latest News

Regulators could move to set caps on loan volumes for borrowers with high debt-to-income ratios if the housing market recovery continues to ...

The federal Treasurer has welcomed the final budget outcome for the 2019 financial year, which shows that the deficit now equates to zero pe...

The Federal Reserve has slashed rates for the second consecutive month, “reinforcing” the necessity of further cuts to the cash rate in ...

FROM THE WEB
podcast

LATEST PODCAST: New lending launches

Do you think the mortgage market will see more consolidation this year?

Website Notifications

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