Friday, 13 February 2015

Lower interest rates to fuel ongoing home investor boom

Latest ABS home investor loan data confirms the unrelenting boom in residential l investment activity.

The original value of home loans for investors approved nationally surged by 18.2 percent over December to a new record high $13.8bn.  Investor activity now accounts for 50.8 percent of all home loan approvals.

NSW and Victoria each recorded new monthly record highs for investor loan approvals in December.  NSW loans increased by 12.3 percent over the month to $6.3bn, with Victorian loans up by 32.3 percent to $3.7bn.

Investor home loans in New South Wales increased strongly by 35.5 percent over 2014 – clearly the best performance of all the states.

NSW now accounts for 45.1 percent of all national home loan activity for investors with Victoria accounting for 26.7 percent. 

NSW investors are responsible for 59 percent of home loan approvals in that state with Victorian investors accounting for a 50.2 percent total local market share.

Lower interest rates are set to increase investor activity particularly in the strong Sydney market reinforced by rising rents and prices, low vacancy rates and low and falling bank deposit rates. 

Latest unemployment data from the ABS reporting a national rate of 6.4 percent – the highest in 12 years – indicates more interest rate cuts on the horizon.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson