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Property Investors Resurge: Accounting for One-Third of New Home Loans

There is a big surge in loans to real estate investors. In this article, we uncover the driving forces behind heightened investor interest and explore the potential effects for the property market for 2024.

It looks like property investors are back in droves.

The most recent figures from the Australian Bureau of Statistics (ABS) show that in December 2023, banks lent over $26 billion in new home loans. Notably, a substantial one-third of this amount, a staggering $9.5 billion, was allocated to property investors.

This represents a significant 36.2% share of all home loans, marking the highest market share for property investors since mid-2017. This figure reflects a notable increase from December 2020, when the ABS reported that investors accounted for only 23.6% of mortgages. The question begs itself: what factors are causing to this substantial up-shift in recent times?

What is the Appeal of Investment Properties anyway?

Owning a rental or investment property holds various reasons for its appeal. One significant aspect is the potential for additional income, with some investors currently enjoying highly attractive rental yields—calculated as annual rent divided by the property’s purchase price. Notably, PropTrack reports yields reaching as high as 9% in certain suburbs. Furthermore, investors anticipate the growth of their property’s value over time, leading to substantial capital gains. CoreLogic’s analysis of 86,000 property resales in the third quarter of 2023 revealed that 93.5% were sold for a profit, with a median gain of $298,000. Additionally, ANZ Bank predicts a further 6% increase in home values in 2024. Couple this with record-low rental vacancy rates of 1.1% in January 2024, and many investors are securing quality tenants, contributing positively to cash flow.

How might the return of investors affect the market?

From a personal standpoint, acquiring an investment property has the potential to significantly enhance your long-term financial stability. The Australian Bureau of Statistics (ABS) recognizes that the sustained growth in house prices, despite higher rates, is playing a crucial role in the increase in household wealth in Australia. Taking a broader perspective, PropTrack highlights that the resurgence of investor activity not only is good for the market’s overall health but also acts as a catalyst for increased new construction. In essence, the advantages stemming from a rise in rental properties have the potential to extend beyond individual investors.

Are You Considering an Investment Property?

If the idea of getting an investment property or expanding your existing property portfolio is on your mind, reach out to us today on 1800-E-LOANS to explore your investment loan options. We can assist in determining the potential equity you may leverage and assess your overall borrowing capacity. Our expertise allows us to guide you in finding the right mortgage with a competitive interest rate from our extensive network of lenders in Australia, freeing you to concentrate on finding your ideal investment property.

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1800 35 62 67

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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