Mortgage figures just released have confirmed what most people in the real estate industry already knew. Almost 40% of all mortgages processed last month were taken out by investors and this group is now a major driving force in the current resurgence of the Australian property market. Enquiries to agents for properties suitable for generating rental income are strong and this trend shows no signs of abating.
Opportunities Abound for Property Investors
Our clients here at Fountain Property Group are attracted by continuing low interest rates and the comprehensive investment program we have developed. They recognise the opportunities available to either start or build on investment portfolios while market conditions are favourable. The timing is perfect for people to get the equity in their existing properties working for them.
Mortgage figures vary from state to state as would be expected, with investor activity in New South Wales soaking up 49% of all new home loans. This is the standout performance by far, with Victoria and Queensland sitting at 37% and Western Australia and South Australia at 32%. While this may be good news for sellers, we have to agree that it is not necessarily good news for first home buyers.
First Home Buyers Struggling to Compete
Historically, first home buyers could be expected to take out around 20% of home loans, but last month this figure was only 10.7%. There is growing concern that the investor-driven demand for rental properties is driving up property prices and pushing first home buyers out of the market. This is especially the case in the desirable residential properties close to major centres and work opportunities.
Investors Unfazed by Possible Rate Increases
Fixed rate loans peaked at 30.7% of loan activity in April 2013 and have since continued to slide as a percentage of the total loan pool. In March 2014 it was down to 23.9%, which indicates to us that investors are not only confident about their ability to repay their mortgages but are also unconcerned about the impact of potential rate increases. Again, this is typical of rate increases, which have a much more severe impact on owner-occupiers than they do on investors.
While we can all sympathise with the struggles of first home buyers to get a foothold in the current market, we cannot ignore our responsibilities to our clients. We are managing an ethical and lucrative property investment program to assist our clients to create a very comfortable retirement.
Property has always been a comfortable investment vehicle for Australians and after a rather lengthy hiatus it is performing well. If the market slows through lack of first home buyers, it will again be investors who will pick up the slack.