Mortgage broker AFG says nearly half of its mortgages written in NSW last month were for property investors, in yet another sign that investment in property is heating up in the country's largest state.
Investors accounted for 49.5 per cent of its mortgages, up from 45.9 per cent in July and 44.7 per cent in August last year, the broker said.
"This is the highest level of investor activity the company has ever recorded for any state," AFG said today.
While investors are being attracted by low rates, first-home buyers have shunned the market amid record high price and as incentives have been cut.
The broker's numbers are latest sign that investors – attracted by very low interest rates – are playing a key role driving the recovery in the housing market.
Across the economy, ABS figures show loans to investors accounted for 35 per cent of new housing finance commitments in June, up from 33.5 per cent a year earlier. First home buyers made up just 15.1 per cent of housing commitments in June.
Stronger growth in lending to investors was also been confirmed by official figures from the Reserve Bank last week.
1 IN 2 NSW HOME LOANS FOR INVESTORS: AFG MORTGAGE INDEX
49.5% of all home loans processed in NSW last month were for investors, according to AFG, Australia's largest mortgage broker. This is the highest level of investor activity the company has ever recorded for any state.
Investor participation across the nation was generally high. Investors comprised 36.7% of new home loans processed in VIC, 35.8% in QLD, 32.9% in SA and 28.4% in WA.
August was a bumper month for AFG, which processed $3,613 million in finance - slightly more than the record-breaking figure of $3,608 million recorded in May this year. AFG has 10% of the total home loan market (Source: ABS and AFG data) and overall trends it reports are usually confirmed by ABS statistics six weeks later.
Mark Hewitt, General Manager of Sales and Operations says: 'With property prices starting to rise, and rates set to remain low for a while yet, a lot of investors are anticipating the next property cycle. The NSW figure is very strong, but in part this is because two thirds of first home buyers exited the market after the withdrawal of buyers' grants. A decisive result from next weekend's election will almost certainly support the return of broader-based confidence across the country.'
Along with unprecedented levels of investor interest, NSW saw the average mortgage size break through the $500k barrier for the first time ($505k).
This figure compares with average new home loans of $434k in NT, $405k in WA, $386k in VIC, $352k in QLD and $319k in SA.
Enthusiasm for fixed home loans fell for the fourth month in a row - they comprised 26.1% of all new home loans. While below the 30.7% high water mark of April this year, this figure is still relatively high, suggesting that many borrowers are locking in part or all of their loans in anticipation of the rate cycle turning.
It was a very strong month. The strength of the investors especially in NSW is hard to ignore. It's a pity that FTB's are not in the market in bigger numbers, I have concerns about a future society where investors have a stranglehold on housing, but you can't make FTB's buy if they don't want to.
Pre GFC the investor segment was probably a bit brittle with a lot of low doc loans used, but now all loans have to pass a rigid serviceability test, I doubt that the investor segment will be as brittle going forward.
Any expressed market opinion is my own and is not to be taken as financial advice
Australian home values have posted their strongest quarterly gain since the end of the 2010 boom, with signs that record low interest rates are creating conditions for a new boom this spring.
The performance comes as figures show the number of investors piling into the market hit a record in one state and residential construction activity has staged its first rally in three months.
RP Data-Rismark report dwelling value rose 4 per cent in the three months to August, posting the highest quarterly rate of capital gain since April 2010, right before the last boom began to fizzle.
In Sydney, dwelling values shot up 5.4 per cent and Melbourne rose by 4.8 per cent. They increased 3.7per cent in Canberra, 3.4 per cent in Darwin, 3.1 per cent in Perth and 1.7 per cent in Brisbane.
''It's definitely the low interest rates that's driving this activity,'' said RP Data analyst Cameron Kusher. ''The thing from here will be what happens in spring. It's looking like a pretty good spring selling season - the amount of stock on the market is fairly low and clearance rates are quite strong.''
Last weekend, nearly 2000 homes went under the hammer around the country and the clearance topped 75 per cent. It was a record 84 per cent in Sydney and a robust 75 per cent in Melbourne, according to analyst groups.
Louis Christopher, managing director of SQM Research, said the country had seen its strongest winter market in years and it was set to continue for spring. ''I'm still convinced its a very strong market out there, particularly for Sydney.''
Property investors have become an increasingly dominant force driving the market, figures from mortgage broker AFG show.
Nearly half of all mortgages (49.5 per cent) written in NSW in August were to investors, rising from 44.7 per cent last year to hit a new high. In Victoria, the market share for investors rose to 36.7 per cent from 35.2 per cent last year.
''With property prices starting to rise, and rates set to remain low for a while yet, a lot of investors are anticipating the next property cycle,'' said AFG general manager Mark Hewitt. ''The NSW figure is very strong, but in part this is because two thirds of first home buyers exited the market after the withdrawal of buyers' grants.''
Property investors are returning to bricks and mortar – and in a big way.
Around 49.5 per cent of home loans processed in New South Wales last month were for investors, according to mortgage broker company Australian Finance Group. This is the highest level of investor activity the company has ever recorded for any state. Other areas around the nation were also strong, with investors comprising of 36.7 per cent of new home loans processed in Victoria, 35.8 per cent in Queensland, 32.9 per cent in South Australia and 28.4 per cent in Western Australia.
General manager of sales and operations Mark Hewitt says $3613 million worth of loans were processed in August, which is higher than the record-breaking figure of $3608 million in May.
“With property prices starting to rise and rates set to remain low for a while yet, a lot of investors are anticipating the next property cycle,” he says.
“The New South Wales figure is very strong, but in part this is because two thirds of first homebuyers exited the market after the withdrawal of buyers’ grants.”
Along with unprecedented levels of investor interest, New South Wales saw the average mortgage size break through the $500,000 barrier for the first time, to $505,000. Fixed home loans are also becoming more popular, with 26.1 per cent of new loans now fixed. This suggests many borrowers are locking in part or all of their loans, in anticipation of the next rate cycle turning, Hewitt says.
I honestly used to think the same way Ponz but realistically, what's the alternative? Are we happy to get absolutely smashed by the RMB in a global economy? At the end of the day Australia will eventually have it's economic pullback, but more shit (infrastructure etc) will get built if we do it this way IMHO.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
It was a very strong month. The strength of the investors especially in NSW is hard to ignore. It's a pity that FTB's are not in the market in bigger numbers, I have concerns about a future society where investors have a stranglehold on housing, but you can't make FTB's buy if they don't want to.
Pre GFC the investor segment was probably a bit brittle with a lot of low doc loans used, but now all loans have to pass a rigid serviceability test, I doubt that the investor segment will be as brittle going forward.
The finance numbers tell you who the purchasers were, but who the vendors were is an important part of the equation. If it is just older investors cashing out and selling to younger investors, then the nett effect on the rental housing stock as a percentage of total stock is nil regardless of the number of transactions.
I haven't seen any sign yet of a big shift from OO to renting (but it could take some years for that to become apparent.)
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Rising property prices and low interest rates have catapulted the average home loan in NSW above $500,000 for the first time, one of Australia's largest mortgage brokers says.
Australian Finance Group (AFG), which has roughly 10 per cent of the mortgage market, says its average new home loan across the state last month was $505,000 - an increase of 6 per cent on the same period last year.
Mortgages with banks and other institutions are also rising in response to a housing market that has been strong all year, especially in Sydney where auction clearance rates have hovered around 80 per cent for the past few months and prices in many suburbs are at their highest levels.
Sydney's home values have risen 5.4 per cent in the past three months alone, figures from RP Data show. The city looks set to record growth of about 10 per cent for the year.
The Bureau of Statistics' latest housing finance data for June showed the average size of new owner-occupier home loans in NSW had increased 4 per cent since February, to $341,000. But over the past decade, it had increased more than 50 per cent.
The executive general manager retail at National Australia Bank, Vicki Carter, said there had been a renewed interest in real estate, particularly among investors following the Reserve Bank's decision to cut rates to record lows last month.
''At NAB, we've already seen an increase in customers coming to see us about a home loan and we expect to see this continue,'' she said.
Australian Property Monitors senior economist Andrew Wilson said investors were literally queuing up to buy property in Sydney, particularly the outer western suburbs from Macquarie Fields to Penrith.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy
AFG_Housing_Finance.jpg (25.85 KB)
