Australian Bureau of Statistics (ABS) figures released on Thursday showed that new home loan commitments to investors in April rose by 5.6% when compared to March, making it the biggest increase since the Reserve Bank of Australia (RBA) began lifting interest rates.
New investor lending now sits 36.1% higher over the past year.
CBA senior economist Belinda Allen noted that investors are focusing on cities such as Perth, Adelaide and Brisbane, where housing values have risen strongly recently.
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“There’s no end to price impacts from the lack of supply and strong demand. It’s economics 101”, Allen told The AFR.
“Owner occupiers and investors are searching for more affordable housing and this is probably stronger in the investor space at the moment. Investors are making choices based on where they’re expecting the housing market to go”.
Oxford Economics Australia senior economist Maree Kilroy also told The AFR that Perth was a key target for investors.
“Its rental market vacancy rate is the lowest of the capital cities, which has pushed up rents, and now the prices are starting to kick through, too, because rental growth is strong”.
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Indeed, investor activity over the past year has been led by Western Australia (+70.5%) with South Australia, Queensland, and New South Wales all growing by around 44% year-on-year.
Victoria remains the laggard and this is also reflected in more modest home price gains.
Despite high interest rates, conditions remain favourable to investors.
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Rental inflation continues to run hot, lifting income returns at the same time as prices are appreciating.
Source: CoreLogic
Moreover, with rents rising at a faster pace than home values, gross rental yields have continued to trend higher:
Source: CoreLogic
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