Investors have stormed back into the property market and nearly hit a 3 year high, according to new figures recently released.
The Australian Bureau of Statistics (ABS) Lending Indicators for January found the number of loan commitments for investors soared by 9.4% over the month and have increased by a staggering 22.7% over the year.
The value of new loan commitments to investors rose 6.7% in New South Wales in January to be the highest since about June 2018, according to the ABS.
What’s the industry actors’ reaction
Grant Foley Property Director and Buyers’ Agent Grant Foley has witnessed a pronounced up tick in Sydney-based investors over recent months, especially those in strong financial positions. In fact, his client mix has reversed from last year to be predominantly investors, who have been referred by investment-savvy mortgage brokers and financial planners.
“Corporate professionals and successful business owners are restarting their investment plans now that the uncertainty of 2020 is behind them,” Mr Foley said.
“The values of their properties have continued to grow over recent years and they are now feeling confident to reuse some of their equity by starting, or growing, their strategic property investment portfolios.“
“Many investors also have additional cash at their disposal after being forced to reduce their discretionary spending over the past year and some have also withdrawn funds from the stock market to invest in property rather than shares.”
Mr Foley said that rental vacancy rates had returned to pre-pandemic levels in Sydney with many regional areas experiencing significant rental under supply issues. Record low interest rates were the main driver for the increasing investor activity, which is drastically reducing hold costs in a time of strengthening market conditions.
“The rising market conditions are also motivating more investors to make wise use of their equity now, with strong property price growth forecast over the next 2 years,” Mr Foley said.
Enquiry has stepped up from mid-to-senior level corporate managers and successful business owners are being referred by investment savvy mortgage brokers and financial advisors. Last year, client mix was 70% owner occupiers and 30% investors, but that is reversed.
Mr Foley said that investors are seeking qualified property investment advice to build a tailored strategy, including the selection of strategically located real estate assets.
“Sophisticated investors understand the value in outsourcing the thinking to a qualified expert, because one or two per cent extra capital growth per year can add up to hundreds of thousands of dollars over the long-term,” he said.
“When a mortgage broker puts their client in the hands of a quality investment advisor or buyers’ agent, it acts as a value-add to their mortgage broking business and aids in the likelihood of a quality client outcome, which is great for everyone involved”.