The Australian property market has experienced a notable uptick in investor activity, with new housing loans to investors climbing 10.4% higher than in 2022 and rising a remarkable 37.3% from 2021, ABS figures showed.
The latest lending data from ABS highlighted this growth, marking a robust recovery and investor confidence in the market. In November alone, the monthly loan figures peaked at 2,211, setting a new record for investor engagement in the property sector.
REIWA CEO Cath Hart (pictured above) expressed optimism about the increased investor participation in the market.
“WA lost a significant number of rental properties from the market post-COVID,” Hart said. “Our tight rental market needs every property it can get, so it is good to see investor loans increasing.
“Unfortunately, despite the increase, our data does not yet show an increase in the number of rental properties, so the significant imbalance between supply and demand in the rental market remains.”
Hart noted that while the loan statistics did not reveal the geographical location of the investors, there has been significant engagement from investors in the eastern states in 2023, as reported by REIWA members.
“They’re drawn by the value our market is offering,” she said. “Despite increases over the past few years, our property prices are much more affordable than the east coast and we’ve had significant rent price growth. This means properties have the potential for very good yields.”
The data showed a marked interest from investors in construction projects, evidenced by a 21% increase in loans for land and a significant 52.7% surge in building loans in 2023.
“Builders and developers have also been reporting strong sales to eastern states investors,” Hart said. “This is good news and will boost rental supply in the longer term as these houses are completed.”
Conversely, the total number of new owner-occupier loans dipped by 12.2% from 2022, with a notable decrease in lending for building and existing dwellings, which were down 11.9% and 10.9%, respectively.
Hart linked the decline in building loans to the end of COVID building incentives, which had initially spiked construction loans but later led to increased construction costs and extended completion times, shifting focus towards the established homes market.
In 2021, loans for building projects accounted for 22%, while 63% of owner-occupier loans were for existing dwellings. This contrasts with 2023, where the proportion fell to 13% for building and rose to 71% for existing dwellings.
“This lack of investment in new builds is concerning as WA desperately needs more new homes,” Hart said.
The average loan size for owner-occupiers saw a slight increase, up 3.5% to $509,275 over the year to December and was 3.3% higher to $624,383.
In 2023, the number of new loans to owner-occupier first-home buyers decreased by 12%, reaching 15,604. However, despite this decline, first home buyers still constituted 35% of the new owner-occupier loans.
“Comparing the number to shortly before the pandemic, this is fairly normal representation,” Hart said.
“The building incentives, combined with low interest rates, saw a massive spike in first-home buyer activity, with the proportion of owner occupier loans to first home buyers peaking at 43.2% in early 2021.
“We saw a similar effect during the First Home Owner’s Boost period when they peaked in 2009 at 44.9%, before plummeting to 27.9% after the grants had ended.”
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