Investors have stormed back into the property market and hit a nearly three-year high, according to new figures.
The Australian Bureau of Statistics (ABS) Lending Indicators for January found the number of loan commitments for investors soared by 9.4 per cent over the month and have increased by a staggering 22.7 per cent over the year.
Property director and buyers’ agent, Grant Foley, has witnessed a pronounced uptick in city-based investors over recent months, especially those in strong financial positions.
In fact, his client mix has reversed from last year to be predominantly investors, who have been referred by investment-
savvy mortgage brokers and financial planners.
“Last year my client mix was 70 per cent owner occupiers and 30 per cent investors, but, right now, that is transposed,” Mr Foley said.
“Corporate professionals and successful business owners are restarting their investment plans now that the uncertainty of 2020 is behind them.
“The values of their properties have continued to grow over recent years and they are now feeling confident to reuse some of their equity by starting, or growing, their strategic property investment portfolios.
“Many investors also have additional cash at their disposal after being forced to reduce their discretionary spending over the past year and some have also withdrawn funds from the stock market to invest in property rather than shares.”
Villawood Properties executive director Rory Costelloe said overall, the market has been so strong sales-wise that they expect investor loans to be up significantly.
“I’d thought it might have been more than 20 per cent,” Mr Costelloe said.
“At Villawood, we don’t encourage investors – we encourage owner-occupiers in our communities – but they’ve certainly been prevalent in the market.”
On the Surf Coast there is certainly a return of commercial, retail and industrial inquiry, says Hayden Real Estate director Bryan Hayden.
“However, this is on the back of a heated residential market caused as much or more by lack of supply as to increased demand,” Mr Hayden said.
“Demand for Surf Coast property has not increased as much as some would believe however supply dwindled alarmingly over the 2000 period due to all forms of owners withholding stock to play safe and wait.”
He said we could expect to see more adventurous investors attempting to enter the market with held back funds from last year.
“They are, however, cautious and look for solid leases and five per cent plus returns, we are seeing a lot more premises being occupied but long-term leases are still being tested,” he said.
“The common belief is we need to get through this coming winter to get a clear picture of the economy which is being held together by temporary rent holidays, lower interest rates, and strong exports.
“The tourist industry is now flourishing but qualified labour almost impossible to get.
“The big enquiry is for vacant land of all sizes as there little supply and no rezoning in sight.”