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Investor Lending Hits Six-Year High

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Investors are continuing to boost the housing market, with new loan commitments reaching near-record higher.

As well, owner-occupier loans are still well ahead of pre-pandemic levels.

Investor financing was the standout in the latest Australian Bureau of Statistics results, up 89.6 per cent on last year, slightly higher with a 1.1 per cent increase on October.

The lure of Queensland for investors continues, with commitments rising 8.9 per cent to a record high of $2.1 billion while interest in NSW and Victoria also remained elevated.

Although total housing commitments fell 2.5 per cent for the month, it was 32.2 per cent higher than last year as owner-occupied financing continued to drop from its peak in May at 4.1 per cent.

Meanwhile, the more volatile financing data for business construction rose 3.6 per cent for the month and 21.9 per cent over the year.

New loan commitments for investor housing

A graph for new loan commitments for investor housing, state by state breakdown in different colours showing NSW VIC and QLD are ahead of other states.

^Source: Australian Bureau of Statistics, seasonally adjusted values by state Oct 2021

ABS head of finance and wealth Katherine Keenan said investor lending was at the highest level since its record peak in April 2015.

“The value of new loan commitments for investor housing has grown for 12 consecutive months, reaching $9.7 billion in October 2021,” Keenan said.

“While the value of investor loan commitments has grown 90 per cent over the past year, the number of investor loans only accounted for 33 per cent of all new loan commitments for housing in October.”

Real Estate Institute of Australia president Adrian Kelly said it was positive news to see the return of mum-and-dad investors who were particularly active in Queensland, South Australia and NSW.

“The housing market has seen significant growth over the past year ... a sign this sector provided strong returns and future growth in many states and territories,” Kelly said.

However, new loan commitments to first home buyers fell for the ninth consecutive month.

The REIA president said this was creating further concerns around housing affordability with this group accounting for around 20 per cent of all new loan commitments in October.

“Of interest is that the drop in the number of owner-occupier first home buyer loan commitments was seen across most states and territories,” Kelly said.

“The ABS reporting Western Australia saw a massive fall of 13.8 per cent while Queensland fell by 6.3 per cent and New South Wales by 4.3 per cent.

“Small increases were recorded in Victoria, which rose by 1.9 per cent, while the Northern Territory increased by 6.0 per cent showing these sectors remain in high demand.”

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Article originally posted at: https://www.theurbandeveloper.com/articles/investors-rush-to-buy-australian-homes