NationalNEWSSUPPLIER NEWS

What is the state of the current property investment market?

Ray White Chief Economist Nerida Conisbee has revealed the current property investment market is particularly buoyant.

Analysing the latest Australian Bureau of Statistics (ABS) finance data, Ms Conisbee said the increase in new loan commitments had rapidly increased.

“In May 2020, investor-lending hit its lowest level ever recorded, plunging even further from the low levels recorded during the Financial Services Royal Commission,” Ms Conisbee said. 

“At this time, there were a lot of troubling conditions for investors – prices were falling, rents were falling and there was a six month eviction freeze for tenants. Investing in housing didn’t seem like a particularly good idea.”

House prices, of course, turned around very quickly, rents began to recover and Ms Conisbee said we are now in a situation where investing in housing is again in favour. 

Across Australia, prices have jumped 13.5 per cent and rents are up 6.6 per cent.

There are only 59 suburbs (1.2 per cent of suburbs with house medians) that are recording house price declines and only 26 suburbs (1.4 per cent of suburbs with unit medians) that are recording unit price declines.

Also working in investors favour are the same conditions that have been driving owner-occupiers.

Ms Conisbee said this includes very low interest rates, relatively easy access to finance and high savings rates. 

“Investor lending is now 9.4 per cent below the 2014 peak but has more than doubled over the past 12 months,” she said.

“While Australian investors are back, the same can not be said for offshore investors who were such major drivers of new development in the last investment surge between 2014 and 2016. 

“Similarly, the types of purchases that investors are making seem to be different.

“High density, off-the-plan developments are not as popular, instead replaced by outer suburban and regional areas.”

Ms Conisbee noted investors were consistently targeting capital growth, as opposed to rental yield.

“While prices have increased significantly, yields are now at record lows as prices continue to outpace rents,” she said.

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