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Investor Activity Still Relatively Low

Investor Activity Still Relatively LowDespite recent increases in loans to investors, their buying activity remains subdued, according to Andrew Wilson, consultant economist at Bluestone Home Loans.

Investor lending rose 0.4% in October to $9.87 billion, which was the third-highest value of lending to this group on record, behind only the $9.91 billion and $10.43 billion recorded in May and June 2015.

However, the investor market share of total residential lending remains below its long-term average of 33%, falling from 43% in June 2015 to the current 29%.

“Although reviving, investor activity clearly remains in the doldrums, with the national shortage of rental properties reflecting the restrictive policies of recent years which is pushing rents through the roof,” Wilson says.

After June 2015, the high levels of investor activity helped to drive up the monthly value of owner-occupier loans (up 60%) and first-home buyer loans (up 103%). Wilson says this caused APRA to place restrictions to reduce investor lending to relieve pressure on the escalating house prices and interest rates at that time.

“Currently, however, investor activity remains low,” he says.

“Some housing markets are cooling – particularly in the primary investor markets of Sydney and Melbourne – and the RBA continues to stipulate that interest rates will not rise until at least 2024,” Wilson says.


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