Investors seemed to have retreated last year as rate hikes dampen financing options across mortgage borrowers.

Figures from the Australian Bureau of Statistics that the number of new investment loan commitments has dropped nearly 28% since December 2021.

Propell managing director Michael Pell said the volume of new investors has fallen off a cliff because of the rising interest rate environment, which prevented many from accessing finance at a time when the rental markets are critically undersupplied.

“Analysis of latest official lending data also found that the number of new investor loans had been steadily increasing from the low point in May 2020 until about June last year, which is when the current investment downturn began.”

Investors accounted for around 33.6% of new mortgage lending across Australia over the month of December, down from the decade average of 34.6%.

The steep decline in investor activity would likely push rents higher over the coming months.

Figures from CoreLogic show that the annual growth in Australian rent values was 10.2% in the 12 months to December, which was a new record high.

“There is no question that the rental market is very tough for renters, which is why we need more investors purchasing property to help alleviate the current critical undersupply of rental properties,” Mr Pell said.

Mr Pell said the softer sales market conditions and the surging rents would mean an ideal timing for would-be property investors to enter the market.

“In fact, it is those prospective investors, who perhaps already own a home, who are the best placed to take advantage of the current market dynamics, while also being unlikely to face the lending headwinds that existing investors may be experiencing at present,” he said.

“With less buyer activity more generally, first or second time investors with budgets in the $600,000 to $800,000 price bracket are currently well placed to secure properties with capital growth potential as well as solid yields, especially across Southeast Queensland, and in strategic locations in New South Wales and Victoria.”


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