Latest NewsProperty Bubble in Australia Fuelled by First Home Buyers Now Continues with Investors!Monday, 19 December 2016

PROPERTY investors have returned in force to Australia’s major capital cities with more than one-third of home loans sourced for investment purposes.

The percentage of loans made through Australia’s biggest mortgage broker surged 26 per cent in the past six months as buyers shrugged off the global financial crisis, rising interest rates and warnings of a property bubble.

The AFG Mortgage Index, released yesterday, showed the proportion of loans to investors rose to 34.1 per cent of all mortgages in February, up from 27.1 per cent in August. It was the highest level of investor interest in the four-year history of the index.

AFG has a loan book of almost $60 billion and 2100 member brokers, and claims about 10 per cent of the mortgage market.

The strongest interest in investment property came from NSW (38.5 per cent of all loans), followed by South Australia (37.6 per cent) then Victoria (37.2 per cent). AFG sales and operations general manager Mark Hewitt said investors had been waiting on the sidelines during the financial crisis but were now the driving force in the property market, with the proportion of loans to first-home buyers plummeting from 20.9 per cent to 11.3 per cent over the same six-month period.

“People had been sitting on their hands in relation to property investment,” Mr Hewitt said. “They’ve been in and out of the share market, but that’s still seen as a bit risky.

“They have regained confidence in property being a sound investment — that’s the feeling we’re getting.” Melbourne investor Stephen Watts said now was a good time to buy property there because developers affected by the financial crisis were not building many homes and demand for rental accommodation was increasing.

He has bought three properties off the plan in the past six months, expecting prices to rise strongly this year.

The upward trend of interest rates did not concern him. “Most serious investors will not get put off by an increase in interest rates,” he said. “You look at it as a long-term investment.” The size of the average mortgage for AFG clients was $361,589 in February, rising to $420,554 in NSW.

AFG said its figures supported Australian Bureau of Statistics numbers showing second-tier lenders were increasing their share of the mortgage market, although the banks still secured 83 per cent of loans last month.

Another mortgage broker, Mortgage Choice, also notes a fall in interest from first-home buyers. Last week it warned that more than 25 per cent of Australians looking to buy their first home in the next two years would give up if interest rates rose by two percentage points.

Previous Next

Share This Article




Previous Articles