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Property investment falls to a record low

Investment lending in the Australian housing market fell to a record low in August, but a global pandemic isn’t the only reason for the slump.

CoreLogic notes property investor activity in Australia has actually been falling since early 2015, when macro-prudential policies were introduced in mortgage lending.

The latest ABS housing finance data shows a recent acceleration of sorts. The percentage of finance lent to investors hit a record low of 23.5 per cent in August.

As Eliza Owen, Head of Research for CoreLogic explains, this is significantly lower than the decade average of 36.1 per cent.

“The decline of the property investor has been brought about by multiple factors,” she explained.

“These include temporary policies implemented between 2014 and 2019, which limited lending products favoured by investors; mortgage rate premiums for investor loans; less appetite for high LVR and interest only lending from the banking sector, and less certainty around prospects for capital gains.

Ms Owen also notes that “high levels of housing construction” have softened rental returns, and that COVID “has created a particular negative demand shock to the rental market, thereby further inhibiting returns”.

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