Investor numbers rise as market grows

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The housing finance approval statistics for December 2013 showed that, overall, the total value of dwelling commitments (excluding alterations and additions) rose by 1.8%. The seasonally adjusted series rose 0.2% in December 2013.

In a breakdown of the figures on the RP Data research blog, Cameron Kusher said 60.2% of lending over the month was to owner occupiers (43.4% for new loan commitments; 16.8% for refinances ), while the rest was lending for investment purposes. 

He said that both owner occupier loan figures were the lowest in years.

However, the 39.8% of lending for investment purposes was the greatest since October 2003, when it hit 41.2% which was the highest proportion of investment lending on record.

Kusher expressed concern about this near-record level of investment lending.

Investors who were not committed to the housing market long term could create difficulties in future – especially when interest rates were no longer at record low levels, he said.

“We could potentially see an influx of investment-grade properties come to the market when investors look to exit the housing market and place their investment dollars elsewhere.”

He also noted that the data showed the level of first home buyer (FHB) activity was very low and said it would be interesting to see if there was a rebound in FHB activity over the year.

REIA president Peter Bushby was worried by the slow growth of the owner occupied market – particularly in the FHB segment - for the twelve months to December 2013.

He said the results highlighted the need for government to act on housing affordability and to stem the rapid decline in first home buyers.
 
Meanwhile, the ABS also released its new Residential Property Price Index (RPPI), which now includes units as well as houses, this week.
 
Providing further evidence of continuing growth in markets nationwide, the RPPI data showed residential property prices rose in every capital city over the December 2013 quarter.

Overall, prices were up by 3.4% in the quarter, which equated to a total rise of 9.3% over the last year.

Sydney recorded the largest rise in house prices (4.9%) for the third consecutive quarter. Canberra recorded the smallest rise in house prices with 0.4%.

SQM research director Louis Christopher said that, overall, the results were very strong as expected.
 

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