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Property investor activity still surging


house graph paper1It seems regulatory moves and lender rate hikes have done little to slow down property investors.

New analysis from CoreLogic has revealed that investor activity is continuing to surge. Housing finance data shows a 4.2% rise in investor activity in January, with investors committing to a total of $13.8 billion in housing finance. The result is a 27.5% year-on-year increase, the largest annual increase since August 2014.

CoreLogic researcher Cameron Kusher says that investor housing finance has grown significantly over the past year and is now just 5.3% below its peak in April 2015.

“Investor housing finance commitments are clearly flowing to established homes rather than new homes. This isn’t really a surprise when you consider that the amount of established housing stock is substantially greater than new stock and new housing typically has a price premium over existing stock. Over the month, $1.2 billion in commitments were for new construction, compared to $12.6 billion for established housing stock,” Kusher said.

Kusher also pointed to RBA research showing that outstanding investor credit accounted in January 2017 accounted for 34.9% of all housing credit outstanding and 21.5% of total outstanding credit.

“This shows a significant rise in investor housing credit. In fact, two decades ago investor credit represented 21.8% of total housing credit and 8.7% of all credit,” he said.

In spite of the surge in investor activity, Kusher says that banks are likely to rein in the segment in the months to come.

“Over the coming months, we expect to see some further tightening of lending policies to investors, with some lenders approaching APRA’s 10% speed limit. Should this occur, it's likely to result in a moderate slowing of demand from the investment segment, at least temporarily like we saw in mid-2015 and early 2016.

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