Market/Finance News Blog: Property investment storms ahead

By the resi financial blog team, 24 February 2015

Market/Finance News Blog: Property investment storms ahead

Investment in the Australian property market is showing no signs of slowing down. Off the back of the Australian Bureau of Statistics (ABS) housing finance and lending data for December last year, further CoreLogic RP Data analysis confirmed that the investor market is propelling housing commitment figures to new heights - and this growth is likely to continue. 

CoreLogic dissected the housing and lending data from December 2014 and uncovered some fascinating insights. For one, the proportion of investment lending in the housing market has hit a record peak. Investment commitments accounted for a staggering 41 per cent of the value of all loans in December last year - just short of the October 2003 record of 41.2 per cent, which was recorded at the very height of Australia's property boom. 

While investors will relish the resurgence, Sydney and Melbourne are also feeling the benefits. Commitments in New South Wales grew 34.1 per cent over December, while Victoria saw a 30.3 per cent increase. Investment elsewhere in the country is riding these coat tails, but pales in comparison. With these two states also recording the lowest rental yields and great house value growth, it's clear that investors are scrambling for a piece of their housing markets.

The report also has some interesting insights into what investors are prioritising. Surging house prices and falling rental yields indicate that most investors are concerned with opportunities for capital growth instead of short-term rental yield, particularly in such a low interest rate environment. This confirms what commentators have been discussing over past months. With recent rate cuts expected to encourage investor activity even more, the Reserve Bank is keeping a close eye on developments.

In any case, the report warns that capital growth is not definite - investors who are purely focussing on the long-term should have a thought or two for current yields.

Investment can be a tricky game but for help deciding on the right investment home loan to fit your circumstances, contact a loan specialist at resi.

Categories: Property Investment