Property investor demand waning
New analysis shows investor demand was easing even before APRA’s intervention, and is likely to fall further.
Analysis by CoreLogic has found investor demand was shrinking over the months of February and March, before recent policy announcements from the Australian Prudential Regulation Authority (APRA) putting a cap on interest-only lending. Analyst Cameron Kusher said while investor demand edged up slightly in March according to ABS housing finance figures, it remained well below levels from a few months prior.
“Looking at recent monthly data it suggests that demand from owner occupiers has been reasonably steady while the level of demand from investors has eased. Keep in mind that this data pre-dates the most recent policy announcement from APRA,” Kusher said.
Kusher predicted that demand from property investors would continue to fall in the months ahead, particularly as investors faced a number of headwinds. He pointed to higher mortgage rates, a decline in the availability of interest-only loans and changes to depreciation benefits.
“With the lending environment continuing to change, particularly for investors, we would expect that demand from investors will continue to wane. Higher interest rates, the rationing of the availability of interest-only lending and reduced negative gearing benefits is likely to weigh on investor demand over the coming months,” Kusher said.