Investors at near-record highs? – think again | Property Insiders

By Michael Yardney | 20 Dec 2021

Boy have there been some let’s call them “interesting” headlines in the mainstream media lately. 

Clickbait headlines like: 

  • Suddenly the “peak” is in sight for residential property prices. 
  • Investors are coming to the party too late 
  • Lockdowns are going to cause a double-dip recession 

Fortunately, there has been quite a bit of new data released over the last week that has debunked a number of misbeliefs, including the fact that there are too many investors in the market at present. 

In this week’s Property Insider chat for Yahoo Finance Dr. Andrew Wilson and I explain why we’re not worried by investor activity and why there’s no evidence for a double-dip recession. 

 

Investors at near-record highs? – Think again 

The latest ABS finance approval figures show that the record surge in home lending we experienced earlier this year has peaked, with home loan activity over October falling for the fifth consecutive month. 

Although the number of new loans to owner-occupiers and first home buyers has steadily declined since May, new lending to property investors has continued to rise. 

This has raised concerns from some market commentators who are suggesting that it is now speculation by property investors that are driving our housing market forward. 

They remember that high levels of investor activity in 2015 encouraged APRA – the financial regulator for the banks – to initiate actions designed to reduce lending and this when introduced, these measures put a sudden halt to the property boom. 

Currently, however, investor activity remains relatively low, housing markets are clearly cooling as prices growth wanes, particularly in the primary investor markets of Sydney and Melbourne, and importantly the RBA continues to stipulate that interest rates will not rise until at least 2024. 

At the same time, we really need more investors in the market to provide rental housing stock as vacancy rates are low and rentals are rising dues to a national shortage of rental accommodation. 

Let’s hope APRA remembers its past mistakes and doesn’t interfere unnecessarily with lending practices. 

Moderate decline in GDP kills the silly recession predictions. 

The prolonged lockdowns in our south-eastern states raised the specter of a double-dip recession, but that now seems out of the question. 

Sure recent ABS figures confirmed that economic growth contracted 1.9% over the September quarter, but the results were significantly better than the gloomy numbers that had been widely forecast. 

With lockdowns having ended in October Australians are regaining their confidence, and with a war chest of cash stored up and Australian household wealth at a record high, we’re spending up big according to our banks who are tracking credit card spending. 

This means a sharp rebound in economic activity is likely over the December quarter with a sustained recovery set to continue over 2022. 

It also means we won’t experience the two-quarters of negative growth technically required to experience a recession and although challenges remain with the emergence of coronavirus variants, the Australian economy has again proven resilient. 

Source: NAB and ABS 

This certainly kills stone dead the prospects of another recession as was also predicted by many. 

The ABS reports that the national GDP contracted 1.9% seasonally adjusted over the September quarter which particularly reflects the impact of the coronavirus lockdown is in NSW and Victoria. 

State final demand contracted sharply over the September quarter in New South Wales by 6.5%, with Victoria down 1.4%, and Canberra falling 1.6%. 

All other states, with the exception of Western Australia, reported strong economic growth over the quarter. 

With lockdowns having ended in October, the prospect of a sharp rebound in economic activity is clearly likely over the December quarter with a sustained recovery set to continue over 2022. 

Although challenges remain with the emergence of coronavirus variants, the Australian economy has again proven resilient with consumer confidence rising with the ending of coronavirus elimination policies through lengthy lockdowns. 

Another weekend of strong auction results. 

December has commenced with a wave of weekend auction listings however clearances rates – that have eased over recent weeks – generally remained relatively steady, with sellers overall maintaining the upper hand. 

Watch this week’s Property Insider video as we discuss how most cities continue to record generally strong results for sellers. 

Sydney Auction Market  

Sydney auction market remains strong and steady on record listings day. 

Clearance rates were only slightly lower in Sydney on the weekend despite a record December day for auction listings. 

Sydney recorded a clearance rate of 76.6% at the weekend which was similar to the previous weekend is 77.2%, but again lower than the 82.5% recorded over the same weekend last year. 

A December record of 1189 homes were listed for auction on Saturday, which was just below the previous weekend in November a record of 1234, but significantly higher than 781 auctions over the same weekend last year. 

The clearance rate for houses were 78.1%, with you to slow at 70.7%. 

Source: Dr. Andrew Wilson 

Melbourne Auction Market. 

Another near record auction day – clearance rates remain steady. 

Melbourne’s weekend auction market has commenced December with a near record number of listings for the month. 

Despite the unprecedented flood of listings over recent weekends, clearance rates were steady at the weekend. 

Melbourne reported a clearance rate of 68.5% on Saturday which was similar to the previous weekend and 69.8%, but lower than the 72.8% recorded over the same weekend last year. 

The house clearance rate was 70.1%, with units lower at 62.3%. 

Source: Dr. Andrew Wilson 

..........................................................
 

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog and hosts the popular Michael Yardney Podcast.


To read more articles by Michael Yardney, click here

Top Suburbs : spearwood , coburg north , sth toowoomba , westmead , rooty hill

SHARE