Investor activity still “in the doldrums” despite near-record loan values

Even after home loans have passed their peak, investor activity remains subdued, according to Dr Andrew Wilson, consultant economist at Bluestone Home Loans.

Although homeowners and first-time buyers have reported a steady decline in activity since May, investor loans continued to rise 0.4% from October to $ 9.87 billion . This is the third highest value of loans to this group on record, behind just $ 9.91 billion and $ 10.43 billion recorded in May and June 2015, respectively.

Nonetheless, investor market share in total residential loans remains below its long-term average of 32.8%, dropping from 42.5% in June 2015 to 29.1% currently.

“Although it is picking up, investor activity clearly remains in the doldrums, and with the nationwide shortage of rental properties reflecting the restrictive policies of recent years, rents are skyrocketing,” Wilson said.

Since June 2015, the high level of investor activity has pushed up the monthly value of loans to homeowners and first-time buyers by 60% and 102.5% respectively.

Wilson said this caused ARPA to impose restrictions to reduce lending to investors in order to ease the pressure on escalating house prices and interest rates.

“Currently, however, investor activity remains weak. Housing markets are clearly cooling as price growth declines – especially in the major investor markets of Sydney and Melbourne – and most importantly, the RBA continues to stipulate that interest rates will not rise until at least. 2024, ”Wilson said.

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