Investor activity continues to decline – Real Estate Business
Investor activity continues to decline
The number of active investors in Australia’s property market has fallen month on month, according to a new study.
According to the latest lending indicators from the Australian Bureau of Statistics, the number of real estate investor activity in the market fell to 6.3% in June, continuing its decline from the previous month.
Additionally, figures show that investors now account for 33.8% of mortgage demand by value.
Atlas Property Group director Lachlan Vidler said the findings indicate the pressures currently facing the Australian property market.
“It is clear that the rapid escalation in interest rates has shaken investor lending as well as confidence in May and June,” Vidler said.
“Additionally, we must recognize that since June, interest rates have risen twice more in successive months, so investor activity is even more subdued than this data set reflects.”
ABS data also showed mortgages fell 4.4% in June, setting off a familiar trend, Vidler said.
“In 2017, targeted lending restrictions were put in place to prevent investors from accessing loans, leading to a contraction in the supply of rental properties,” he said.
“Investor confidence only started to improve about a year ago, but now that rates are rising and borrowing capacity is priced at interest rates well above market expectations, many are again unable to secure funding.
“There appears to be an element of deja vu to the current lending situation, which unfortunately risks intensifying the supply and demand imbalance in rental markets across the country.”
That being said, Vidler said sophisticated investors able to still secure funding are in an “enviable position” compared to the same time last year.
“The current market climate, with fewer buyers and more listings along with reduced confidence levels, reminds me of the first year of the pandemic,” he said.
“People who bought property at this time were able to achieve great results because they bought at a time when many others were unable or unwilling to do so.
“Similarly, the current inflationary pressures are worrying many people, but I think they will prove to be temporary, rather than permanent, in the coming months.”