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Home lending activity has recently recorded a substantial increase driven by property investors, according to the latest figures from the Australian Bureau of Statistics.
Over the month, new housing loan commitments rose by 4.9%, in May 2021 to a new high of $32.6bn. This was driven by investor housing loan commitments. In fact, the value of investor loan commitments rose 116% in the year to May 2021, after falling to a 20-year low in May 2020.
On a monthly basis, the value of investor housing loans rose by 13.3% to $9.1bn, the highest since April 2015.
"Despite these strong lending results for investors, feedback on the ground from agents remains that many investors are taking the current high prices to offload investments in light of extensive reforms to residential tenancy laws in some jurisdictions," said Adrian Kelly, president of the Real Estate Institute of Australia (REIA).
Investor loans comprised 28% of the total value of housing loan commitments in May 2021, compared to 46% in 2015,
"Investors and first-home buyers alike are diving into the market, with the latter taking advantage of the current government incentives," Kelly said.
Kelly said the recent lending results reflect the strong growth in the interest of potential homebuyers and investors over the past year.
Still, Kelly cautioned lenders to remain in high alert for the potential lending restrictions in the future.
"APRA has consistently said their true north for changes to current policy settings will be the level of household debt-to-income ratio, with banks showing signs of responding to this in changing some of their products on offer," he said.
