Are we seeing a resurgence of investor activity?

As we are constantly reviewing a range of data here at Cunninghams, it was recently intriguing to note that the proportion of property investors active in the marketplace is now back to its long-term average, comprising 34% of mortgage demand. This trend is based on the value of new mortgage commitments, as per data from ABS lending indicators. This surprising turnaround signals a shift within the property investor landscape, and may have an impact on our local market.

The investor sector’s rebound is quite significant. Over the past few years, investor activity had dipped, largely due to uncertain market conditions, a pandemic followed by rising inflation and interest rates. However, as the economy gradually bounces back, property investors have seemingly?regained their confidence. They are, once again, a vital component of the property ecosystem, accounting for over a third of new mortgage demand.

Digging deeper into the data, we see that investor interest is not evenly spread across the country. NSW looks to be a prime hotspot for these revived investors, accounting for a staggering 38% of the value of new mortgage lending across the state. Such a large concentration of investors in NSW underscores the appeal of its property market.

But what exactly is driving this attraction towards NSW? Factors include robust housing price growth, strong rental yields, and the state’s economic recovery. Sydney, in particular, with its high demand for property and strong price growth, is a powerful magnet for investors.

Despite these promising signs, it’s worth reflecting on the impact of rising investors in our market. A surge in investor activity can create a shift in overall property market dynamics. For example, it can lead to increased competition for first-time homebuyers, potentially making property prices more prohibitive. It could also amplify the cyclical nature of property markets, leading to potential instability if not well managed.

However, on the positive side, a high level of investor activity often signifies a strong and healthy property market. It boosts overall demand and can support price growth, which is beneficial for existing homeowners. Furthermore, an active investment community can also contribute to an increase in available rental properties, potentially benefiting renters with more options and competitive pricing.

The resurgence of property investors to their long-term average indicates a noteworthy shift in market dynamics. The evident attraction of NSW, with its promising property prospects, offers valuable insight into the preferences of today’s property investors. As this trend continues to unfold, all property consumers, from first-time homebuyers to policymakers, must pay close attention to maintain balance and ensure the sustainable growth of the property market.