INDUSTRY NEWSNationalReal Estate News

Investor loans hit a record high as affordability pressure mounts

Loans to investors jumped 6.1 per cent in January, showing “investors are backing the housing market”.

The latest Australian Bureau of Statistics (ABS) data showed new investor housing loan commitments hit a record of $11 billion (seasonally adjusted) in January 2022, up 18.2 per cent over the past 12 months.

The last time investor lending was this high was during the previous housing boom in 2015. 

Real Estate Institute of Australia (REIA) President, Hayden Groves said the rise in investor loan commitments was concentrated in NSW, up 9.8 per cent, and Victoria, up 11.1 per cent.

“Investors are backing the housing market with loans to investors rising by 6.1 per cent in January,” Mr Groves said.

“The share of investor lending to all new housing loan commitments was around one-third of the total, in line with longer-term averages.”

Around the country, Sydney and Melbourne lead the way with housing lending growing most in New South Wales (+3.3 per cent), Victoria (+3.2 per cent) and South Australia (+3.6 per cent). While Queensland (-2.4 per cent), Western Australia (-1.4 per cent) and Tasmania (-5.3 per cent) all recorded falls last month.

Housing affordability, in the face of rising inflation, continues to be a concern with the average loan rising $17,000 to a record high of $619,000.

HIA Economist, Tom Devitt said rising prices and affordability issues are also making it tougher for first home buyers.

“The value of loans to first home buyers fell by 5 per cent in the first month of 2022, with the last three months being 14.8 per cent down on a year earlier,” Mr Devitt said.

“First home buyers remain more active in the market now than before the pandemic, despite the reduction in the value of lending in recent months.

“First home buyers are very sensitive to changes in market confidence, tightening of finance and declining affordability.”

Mr Devitt said that there is still strong demand for housing from owner occupiers.

“The activity of owner occupiers has kept investors to only a third of the market, compared to over 40 per cent back in 2015,” he said.

“Lending for renovations has also maintained record high levels. The value of loans in the last eight months were double that of the equivalent period a year earlier.”

Show More

Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.