Sounds like a Seinfeld bit, doesn’t it? But seriously, are they buying or bailing? Everyone’s got an opinion, depending on who you ask and what you read.
This difference in opinion could be due to the fact that despite strong investment growth nationally over the past 12 months, new loan commitments have eased slightly since April.
But despite the headline hoopla that investors are exiting the property market in droves due to high interest rates, increased property taxes and new tenancy laws, property investment activity is, overall, on the rise.
New investor loans are up 18.8% nationally on the previous 12-month period, with ABS data showing the number of investor loan commitments in the year to September was around 212,500. If we compare the number of secured housing investment loans reported by the ABS against the number of new listings that CoreLogic deduces are investment properties up for sale, loans far outperform investment properties coming to market.
Since March 2024, investor inferred listings have been trending higher (to 13,000), yet still fall considerably below the peak of investor listings activity, AKA the golden age of November 2021. What a time it was for sellers. As uncertainty loomed around lockdown restrictions and border openings, houses were selling like hotcakes and investment properties – even those short-held – were turning a strong profit. Nationally, home values were up almost 25% from the previous year. Three years on, the market teeters between a buyer’s vs seller’s market, with conditions fluctuating by region.
When taking a look at the volume of investor listings coming to market vs the number of new investment property loans, the situation differs state by state. New loan investment is stronger in high capital growth states like SA, QLD and WA, whereas investor listings are higher in low-growth markets like Tasmania (up 10.3%), Victoria, and to a lesser degree, NSW, where investment listings were 7.2% above average. However, it’s likely that new investor demand is counteracting a loss in investment properties across the state.
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In Victoria, the year-on-year rise in investor loans was only 5.1%, whereas around 3,800 new investor listings in VIC accounted for 29% of the national figure in October – up 10.6% on the previous five-year average. Meanwhile, in SA, QLD, and WA, where house values have continued to rise, investor listings were below average.
Beyond state borders, Australia’s changing economic conditions could also impact property investor behaviour and account for a shift in both the types of investment properties and the types of investors buying them. As less leveraged investors and first home buyers desperate to get a foot on the proverbial property ladder enter the market in higher numbers, investment activity should continue to trend upwards.
