Low investment levels create havoc

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The decline in investors purchasing properties has strained the national housing market, resulting in its biggest fall of the global financial crisis, experts said.

According to the Australian Bureau of Statistics (ABS), the value of lending to investors declined by 45.4% in April from its peak in 2015.

“We are now looking at a very different property market to what it was like during the boom,” said The REA Group Chief Economist Nerida Conisbee.

Buyers from Asia, a key market for new development, declined, with property seekers from China falling by over 60% in the past 12 months alone, Conisbee said.

CoreLogic Head of Research Cameron Kusher said the property policy in the country and the oversupply of dwellings could be the reasons why investors are leaving the housing sector, as investors are charged a premium apart of the higher rate for interest-only loans.

“There’s also been a large volume of new stock in the apartment segment hitting the market at a time when values have started to fall, and it highlights that a lot of investors chase the capital growth, not necessarily the rental return. Once values started to fall, there was less inclination from an investor to purchase a property because the value wasn’t increasing,” Kusher said.

Kusher added that investors account for about one-third of the sector, with dramatic pullback in purchases dragging prices down.

Brisbane was the only capital city where the median home price increased in the three months to June, according to figures from realestate.com.au.

The figures also showed the Queensland capital was up 0.1% in the quarter to $490,000, with Sydney and Melbourne dropping 0.4% to $805,000 and $650,000 respectively.

Adelaide, Hobart, and Perth also fell 0.7% in three months to $440,000, $430,000, and $460,000. Canberra dropped 0.3% at $592,500, and Darwin experienced the biggest decline at 1.6% to $430,000.

 

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