Investors are gradually reentering the property market to take advantage of historically low vacancy rates nationwide, undeterred by the looming possibility of increased interest rates.
According to the Australian Bureau of Statistics, new investor loans experienced a 2% uptick in September, marking a 2.6% year-on-year increase. The surge in investor lending is attributed to the recognition that with vacancy rates at an unprecedented low, acquiring an investment property presents minimal challenges in securing a desirable tenant. Concurrently, the stabilization of interest rates, or a potential marginal rise, has convinced many that the current juncture is opportune for property investment.
In October, the national vacancy rate hit a record low of 1.06%, and unless additional rental stock becomes available or new housing developments emerge, further declines are anticipated. Meanwhile, owner-occupier lending in September dipped marginally by 0.1% month-on-month, while first-home buyer loans saw a 0.5% increase.
Despite the current resurgence, home lending remains significantly below the peak levels witnessed during the Covid-19 pandemic. September recorded 2,688 new home building loans, reflecting a 27.5% decline year-on-year, as reported by the ABS.
The Housing Industry Association notes that lending for building and purchasing new homes is currently at its lowest point in the past two decades. This decline is attributed to the home building industry’s recovery from escalated construction costs in recent years, leading to prolonged construction times and substantial pressure on builders.
In the face of the potential for higher interest rates, home values in Australia continue to ascend. The latest PropTrack Home Price Index indicates that the national median home value increased by 0.36% in October, reaching a new peak. This upward trajectory in home prices has gained momentum during the initial months of spring.
As investors navigate the resurgence in Australia’s property market, the landscape remains dynamic and multifaceted.
