Investor numbers fall 27 per cent as prices rebound

Nov 2023Karen Millers

Despite the strong rebound in property prices, investors continue to exit the market, spooked by higher rates. 

According to the Australian Bureau of Statistics (ABS), the number of new investor loan commitments has fallen more than 27 per cent since interest rates started rising in May last year.

Property Investment Professionals of Australia (PIPA) Chair Nicola McDougall said record low vacancy rates appear to be entrenched, given investor purchases have not only fallen significantly over the past 18 months, but many thousands are selling off their assets, as well.

“It’s clear that the normal flow of investment activity – both inbound and outbound – has been off-kilter for some time, so, until that changes, vacancy rates will remain at record lows and rents will climb ever higher,” Ms McDougall said.

“While governments talk about offering incentives to the big end of town for such supply strategies as build-to-rent, not a red cent has been offered to private investors who supply more than four in every five rental properties in this nation.” 

Ms McDougall said property prices in most locations had posted solid growth over the past two quarters in particular given stronger market metrics. 

“Of course, the low supply of listings was part of the reason why, as well as strong rental market conditions and record overseas migration,” she said. 

“Indeed, a number of reliable forecasters are predicting even stronger market conditions next year – although it appears that listings have started to increase over recent times.” 

Across the country, most property markets have experienced a year of strong price growth.

inSynergy Advisory, Senior Economist, Dr Kevin Hoang said affordability continues to constrain price growth across NSW, however, the surging population is likely to keep prices high.

“Looking ahead, most housing activities will be concentrated in Greater Sydney due to job opportunities and business prospects,” Dr Hoang said.

“Affordability will continue to be the primary driver of housing price growth in Sydney.”

Hotspotting, Director, Terry Ryder said despite facing challenges during the pandemic, Melbourne has shown resilience and stability in its property market. 

“The rising interest rates and shifting lifestyle demands have caused investors and homeowners to look at options such as units and townhouses instead of standalone houses,” Mr Ryder said.

Inspire Realty, Founder and Chief Executive Officer, Colin Lee said there is a significant rise in interest for property ownership and investments in the state of Queensland. 

“In an intriguing twist, property prices have soared by an impressive 9.1 per cent since January, all while grappling with the backdrop of rising inflation and interest rates,” Mr Lee said.

“While housing affordability has become more challenging in Queensland over the last two years, it remains relatively attractive compared to other east coast capital cities, continuing to drive demand for housing in and around Brisbane.”

Jess Elam, who is a Buyer Advocate at Jess Elam Property, said the South Australian housing market had remained resilient, standing out with its strong performance. 

“This growth trend has persisted even as other states started to cool down in 2022,” Ms Elam said.

“This remarkable performance can be attributed to a combination of factors: a scarcity of available properties and consistently high demand. 

“As a result, buyers have remained fiercely competitive, driving property prices upward.”

Buyer’s Agents Tasmania, Director, Samantha Spilsbury said over the past month, she’s witnessed a surge in buyer enquiries, a promising indicator that confidence is returning to the property market.

“Tasmania is on the cusp of an exciting period of growth and opportunity, as the allure of its springtime beauty and thriving real estate market intertwine with the arrival of these new vessels, promising a brighter future for the island state,” Ms Spilsbury said.

Capital Buyers Agency, Buyers’ Agent, Claire Corby said the ACT market continued the conservative path that has dominated 2023.

“Time will tell if the Canberra market continues to simmer along, or if the ongoing shortage will impact prices as we approach the finish line of 2023,” Ms Corby said.

“It’s expected that quality, renovated homes will continue to elicit strong demand and consistent capital growth.”

Motivate Property Group, Managing Director, Corey Jones said the WA population had grown by almost 80,000 people, while simultaneously struggling to build 20,000 homes to keep up with this demand.

“The WA property market has performed considerably well, despite all the negative outlook and opinions of the so-called “economic experts” from the finance and banking industry,” Mr Jones said.

inSynergy Advisory, Director & Chief Property Wealth Planner, Richard Sheppard said considering the current market conditions and the scale of infrastructure investments, Darwin remained an appealing market worthy of exploration.

Originally Published: Rowan Crosby | Elite Agent | 2 November 2023

https://eliteagent.com/investor-numbers-fall-27-per-cent-even-as-prices-rebound/

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