Investors re-entering the market
After cooling their heels during COVID, investors are re-entering the property market with renewed enthusiasm, according to the latest home loan commitment data from the Australian Bureau of Statistics.
But the question is, what’s driving the trend? Well let’s take a little look at the current state of play in the property market and why investors might be feeling more confident.
Early in July, the ABS released the data on new home loan commitments from May this year.
In it, they noted investor housing loan commitments rose 13.3 per cent during the month to $9.1 billion, which is the highest it’s been since 2015.
In fact, the ABS also noted the value of investor loan commitments rose by 116 per cent in the year to May 2021, after falling to a 20-year low in May 2020 during the peak of the coronavirus pandemic crisis.
Where the investment occurred
ABS data further indicates Victoria led the charge when it came to investment activity, with investor loan commitment in the garden state up 17.4 per cent in May.
New South Wales also saw a jump with investor loan commitments rising 12.1 per cent.
And there are a couple of reasons why this revived investor activity might be occurring.
Low rental vacancy rates
Recent data from property portal Domain indicates the national rental vacancy rate has now hit a milestone low, dropping to the lowest point they’ve seen since their records began in 2017.
Importantly, June marked the third month the vacancy rate had declined, with it now sitting at just 1.6 per cent.
While many regional areas have been seeing low vacancy rates for some time, in this instance it’s the major capitals which are enjoying a rental renaissance.
Domain notes Sydney, Melbourne and Adelaide were the cities where the most noticeable drops occurred as renters head back to the metropolitan capitals.
Historic low interest rates
In the interim, interest rates remain at a historic low, making property loans more affordable to manage.
This isn’t likely to change for some time, with the Reserve Bank of Australia confirming at their July meeting that they do not foresee the cash rate rising from 0.1 per cent until 2024.
Together, low interest rates and low vacancy rates mean investors are now beginning to see a solid investment return in the market.
That’s a far different scenario from a year ago when there was a lot of uncertainty in the rental arena and rental moratoriums were in play.
Looking for an investment property?
If you’re considering an investment property, you can view the current list of properties we have for sale here. You can also talk to our expert agents about what specific trends are occurring in various markets.
Meanwhile, if you’re considering selling your property, why not chat with one of our friendly Eview agents on 1300 438 439 to organise an appraisal and understand the state of play in your area?