Investor Lending Surges: Key Trends in Australian Property

Investor Lending Surges: Latest Trends in Australia’s Property Market

Are you finding it tough to locate affordable property in Australia’s major cities?

Feeling the pinch with rising rents and property prices? You’re not alone.

In this week’s property market update, we delve into the latest research and trends shaping the real estate landscape across Brisbane, Sydney, and Melbourne.

Let’s explore the key insights and what they mean for you.

Affordable Locations Still Available

Despite rising property prices, there are still affordable suburbs to be found within Australia’s three major capital cities.

The PRD Affordable and Liveable Property Guide has analysed all areas of these cities to assess them for affordability, investment returns, liveability, and future stock projections.

• Brisbane: 27.6% of suburbs are affordable for house buyers and 43.1% for unit buyers. Suburbs like Strathpine, Griffin, and Alexandra Hills stand out as affordable and liveable.
• Sydney: Although choices are more limited, 11.1% of house suburbs and 36.7% of unit suburbs remain within reach for first-home buyers. Key suburbs include Chester Hill, Granville, and Villawood.
• Melbourne: 24.4% of house suburbs and 42.3% of unit suburbs are affordable for first-home buyers, with Albanvale, Ardeer, and Lalor being notable mentions.

Dr Diaswati Mardiasmo, Chief Economist at PRD, emphasises that while affordability is shrinking, opportunities still exist for savvy buyers.

Investors Pick Up Pace

Investor lending is gaining momentum, according to the latest indicators from the Australian Bureau of Statistics.

Mish Tan, Head of Finance Statistics at ABS, highlights that lenders are borrowing more, reflecting expectations of higher rental yields and greater borrowing capacity of investors.

Key points:

• The value of new loans to investors rose by 5.6% in April, reaching $10.9 billion.
• The average size of an investor loan increased from $592,000 to $648,000.
• Queensland and New South Wales saw the most significant increases, up 46.6% and 43.9% respectively.

In contrast, Victoria experienced a dip in investment loans, potentially due to higher taxes and fees for investment property owners.

However, first-home buyers are making a comeback, with Victoria recording the highest number of first-home buyer loans in April 2024.

Property Market Nears $11 Trillion

Australia’s residential housing market is on the verge of reaching a staggering $11 trillion.

The combined value of Australia’s 11,176,100 residential dwellings rose by $209.4 billion in the first quarter of 2024, bringing the total to $10.72 trillion.

According to the ABS, Australians continue to invest heavily in property, with residential housing values far exceeding those of superannuation funds and the share market.

The average price of residential dwellings increased by $14,300 to $959,300 in the March quarter.

Senior economist Eleanor Creagh from PropTrack notes that despite reduced borrowing capacity due to higher interest rates, buyers remain confident.

“Ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of continued growth,” she says.

Rents Rise Faster Than Wages

The rental market is outpacing wage growth significantly.

Analysis by the Australian Bureau of Statistics and Domain rent data reveals that asking rents for houses increased by more than six times and units by more than four times the rate of wage growth in the March quarter.

• Wages rose by 0.8% while combined capital city asking rents for houses rose by 5% and units by 3.3%.
• Darwin and Sydney saw declines in rents, but Adelaide and Brisbane experienced increases.

Grattan Institute economist Joey Moloney stresses the importance of increasing rent assistance to help those experiencing rental stress.

Auctions Remain Hot

Despite the winter slowdown and the King’s Birthday holiday, auction clearance rates remain robust across Australia.

CoreLogic data shows that 2,232 properties were taken to auction, nearly 15% higher than at the same time last year.

The preliminary combined capital city clearance rate was 72.9%, the strongest result since early May.

• Adelaide: 89%
• Sydney: 75%
• Canberra: 73%
• Melbourne: 70%
• Brisbane: 69%

These results indicate a resilient auction market, with demand keeping up with the rise in vendor activity.

CoreLogic notes that new listings are 9.5% above the previous five-year average, while overall stock levels are 16.1% below the benchmark, showcasing a healthy absorption rate.

If you're looking to navigate the market with confidence or have questions about property investing, let's chat!

Book a one-on-one consultation with me using the link below. Also, don’t miss our FREE workshop on "Pay Off Your Mortgage in 10 Years" to gain valuable insights and strategies.

Cheers,

Rasti

The Architect of Property Wealth