Eleonor Creagh (pictured above), senior economist at PropTrack, highlighted the prospect of capital gains as a key factor drawing investors back to the market, supported by strong rental price growth which is maintaining rental yields.
“With Australia in the midst of a rental crisis driven by a chronic shortage of available rental properties and strong rental demand bolstered by the rapidly growing population, investors have been returning to the market,” Creagh said.
The value of new lending, excluding refinancing, increased for the third consecutive month in April, driven by improving housing market conditions since prices began to recover from 2022’s falls.
“It’s clear both buyers and sellers remain confident in current conditions,” Creagh said.
The 4.8% monthly increase in new lending in April was the strongest since January 2022, with an annual rise of 24.6%, the largest since December 2021.
Despite a recent slowdown in rental price growth, rents have increased faster than property prices, pushing gross rental yields to their highest point in almost four years.
“The strong growth in rents and increasing property prices have attracted investors to return to the market, particularly in Queensland, South Australia, and Western Australia,” Creagh said.
These states have some of the tightest rental markets in the country, with vacancy rates around 1%.
Enquiries on realestate.com.au show more investors heading interstate, with South Australia, Queensland, and Western Australia seeing significant interest from out-of-state buyers.
“It’s no surprise activity from investors is increasing given we’re facing a chronic shortage of housing exacerbated by the lack of new construction,” Creagh said.
Increasing investor activity is expected to add to the pool of long-term rentals, helping to ease rental market constraints. First-home buyers are also moving forward with property purchases, encouraged by government incentives and the expectation of ongoing home price rises.
“The strength in new lending activity is expected to continue in the months ahead as the stage three tax cuts come into effect on July 1, which will support real incomes and boost borrowing capacities,” Creagh said.
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