March 13th, 2015
According to Cameron Kusher from CoreLogic RP Data, “Data over December 2014 shows that finance commitments reached a record high at .6 billion in investor housing finance commitments, up 6.0 per cent from November 2014. Simultaneously, the value of investor housing finance commitments was 18.8 per cent higher in December 2014 than it was in December 2013... ; As a proportion of the total value of housing finance commitments, investors accounted for 41 per cent of all commitments in December 2014 (including refinanced loans), a result slightly shy of the record high of 41.2 per cent recorded in October 2003."
The majority of investor housing finance commitments are for the purchase of existing homes, often in direct competition with first home buyers. ; In fact, according to a new study by Digital Finance Analytics, 35 percent of first home buyers are acting as investors in order to take advantage of financial incentives. ; While investor numbers are definitely high, the number of new buyers making their first purchase as an investment may be distorting the data. ; According to Martin North from Digital Finance Analytics, "If we make adjustments to the ABS data to take account of the trend we see that FTB [first time buyers] are more active than might be thought."
Investor activity is particularly active in NSW, which accounts for 45.3 percent of all commitments. ; Victoria accounts for 26.8 percent, followed by Queensland with 13.1 percent, Western Australia with 8.8 percent, South Australia with 3.3 percent, the ACT with 1.4 percent, the Northern Territory with 0.8 percent, and Tasmania with 0.4 percent. ; Year-on-year, the growth in investment was recorded at 34.1 percent in New South Wales, 30.3 percent in Victoria, 8.6 percent in Queensland, 14.1 percent in South Australia, 4.5 percent in Western Australia, 8.3 percent in Tasmania, 10.6 percent in the Northern Territory and 43.0 percent in the ACT. ;
In related data recently released by the REIA, housing affordability is at its lowest level since March 2013 and rental affordability is at its highest level since June 2009. ; With Sydney and Melbourne recording the greatest increases in home values while also recording the lowest rental yields, investors seem to be making their purchasing decisions based on expectations of strong capital growth rather than current rental income.
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