Property Investors are Back

More investor participation is NOT good news. The thing that can prick this market (more than it overshooting itself) is Govt intervention.

Investors piling in would be an easy sell to the masses to artificially cool the market.

 

I specifically heard the RBA/APRA advise through their updates last week that they would not interfere as long as lending criteria was maintained and at the current time there is zero signs of deteriorating lending policy for FHB or Investors. The lending policies are quite robust now since 2017.

 

I'm sure they'll think of something.

 

Property prices are substantially booming at the moment and currently new home buyers outnumber investors. This has to weaken the anti-negative gearing argument?

 

I can imagine that home owners and investors reaping benefits is just what the Canberra bubble want to see so we can all forget the other issues (misconduct in parliament, politics of the vaccine etc etc).

High house prices might be the 'lesser of two weevils'.

 

A lot of that political stuff is also just news articles promoted/semi fabricated by the media. Don’t get played by the media.

 

Well who is playing who? I guess my point would be that the Canberra bubble might want to play the politics of allowing house prices to rise (claiming credit?) - no doubt through the media - rather than do the more economically rational thing.

I watch the ABC (especially Dr Norman Swan) and SBS (especially Stan Grant) so the crazy media (ie. NSW Shock Jocks and Murdoch / Fox) don't really get an airing in my place.

Thanks for the tip though

 

I want to be as optimistic as you all but I want to see the numbers. The last ones I saw are still anemic as hell compared to 2015.

 

Another article now supporting investors are back on the AFR. Capital growth and strong rental are main factors.

Investors defy tougher lending conditions to bid in hot market

 

Also factor in those who are making treechange/seachanges or moving interstate. Most would likely need to buy their next home as an investment property as banks won't lend for owner occupied properties a fair distance from their current residence as it's obvious they can't continue their jobs when they move. I'm sure that very common scenario since Covid would artificially inflate the investment loan figures.

And as for WH opens, an investor would be a fool to compete at the moment there, if there are in fact investors looking in the 1.2-1.5mil price range. I have a client who can't get a property as demand and prices are still going nuts there, particularly now that many are priced out of Baulkham Hills and have just started looking in surrounding suburbs for something in their price range.

 

Surging Investor activity - going to cause the already heated property market to go berserk.

"Home loan commitments to investor buyers jumped 12.7 per cent from February - the fastest pace of gain since 2003"

March rise in investor loans is the largest jump since 2003!!!

Return of investors pushes new home loans to record high

As I've been saying since January. Being on the ground is ALOT better than going off second/third hand information. Saw this coming months ago. Investors simply cant ignore the crazy growth it was always bound to happen.

 

https://www.smh.com.au/money/borrow...-push-up-property-prices-20210504-p57ots.html

Investors in residential property have come out of hibernation and were the driving force behind the record 5.5 per cent increase in housing finance in March.

Having kept a low profile during the pandemic, investors and speculators are now returning to the market with gusto. And that suggests only one thing – home prices will continue to be pushed higher.

The colloquial definition of what turns a housing boom to a housing bubble is the increasing participation of investors. Judging by the latest numbers from the Australian Bureau of Statistics (ABS) investors could soon replace first home buyers as key drivers of the red-hot property market.

The 12.7 per cent increase in financing to investors dwarfed the (already strong) 5.2 per cent increase in finance to owner occupiers. And the value of those loan commitments to investors is up 54 per cent on March last year.

And the phoenix-like rise in housing investors has coincided with early signs of a peak in demand for finance by first home buyers whose participation in the housing market appears to be running out of steam. In March first home buyer finance fell by 3.1 per cent (seasonally adjusted), according to the ABS.

The levelling out of first home buyer demand was only ever a matter of time as this group would ultimately come up against the barrier of affordability.

Government assistance and low interest rates spurred demand from first home buyers last year but as prices have moved up the window of opportunity has narrowed. Meanwhile, some of the robust demand from those making their first move into property is thought to have been pulled forward.

Investors deserted the residential property market in response to COVID as rents and returns fell as did values in the early stages of the pandemic. The apartments segment was hit particularly hard as immigration disappeared.

While rents remain at historically low levels, there are clear signs that rental increases are starting to come through - particularly in the outer suburbs of capital cities, the smaller capitals and in regional areas. In March rents rose by 0.6 per cent in Sydney and by 0.2 per cent in Melbourne according to CoreLogic.

 

Home buyers face rising house prices and investor competition, or tougher rules on home loans

 

Residential investors are flooding the market

 

Return of property investors turns up heat in hot markets

 

I think thunderstrike might be on to something. Lets continue to monitor.

Anyway. what are the investors on HERE doing? Sitting back? Or getting in?

 

Holding most. Selling some to lock in profits and purchased one to reno, hold, and likely sell (Sydney).

 

Remember loan approvals to investors doesn't mean they will invest, I am refinancing and pulling out equity BUT....I still will need to find my deal.
I can have access to these funds for the next five years, so yes loans will increase and portray such fact.
I agree those that can may or may not access the equity growth but may also just sit on the sidelines for a bit longer though?
I would suggest novice investors may experience FOMO too and they represent around 90% of all investors (one or two IPs).
However, I would assume some investor activity is warranted, especially if $AUS is increasing, such low lenders rates till 2024, before this year elections, economy, so quite few unpredictable factors at play, etc...
I agree, newspaper articles are just that, most often opinions as opposed to actual facts, as people's sentiment can change very quickly indeed. Just think over a year... all those economists and articles posting we may have 30-40% corrections in RE. And even worse all that modelling that was incorrect?
Return of more investors would just push out some more of the FHB instead, as they often compete for similar properties.
I don't know what he crystal ball will bring but let's have another run up the trough.

 

When everyone starts reporting that investors are back in droves from various sources AFR, RE, News, SMH and various other sources including direct quotes from banks and numbers backing up the claims I think there is no denying it.

More news about investors coming back in droves pretty much on a daily basis now. Here is another few links that was just shared with me on my WhatsApp property chat groups.

‘Worrying trend’ emerges on house prices

Choice Charts: Investors rush back into housing. Yes, we all knew that, but gee, so fast

Investors back in the property market

 

What would be interesting to know what % of loans to investors actually translate to purchases?
But as said I don't mind the trend up, I don't think any RE investors do?