- Investor activity has fallen below the 34.9% long-term average
- During 2020, this hit a record low of 22.9%
- Lack of investor activity will make rental shortages worse, says Lachlan Vidler
The latest data from the Australian Bureau of Statistics (ABS) has found that the number of active property investors in the market declined by 6.3% in June alone.
The news means investor activity has fallen below the 34.9% long-term average, a benchmark that was only hit in March this year, with data showing that investors make up 33.8% of mortgage demand by value.
During 2020, this hit a record low of just 22.9%.
Lachlan Vidler, Atlas Property Group Director and fellow The Property Tribune contributor, said that investors were spooked by the rapid escalation in interest rates since May.
“Also, we have to recognise that since June interest rates have been ramped up a further two times in successive months, so investor activity is even more subdued than this data-set reflects.”
Mr Vidler noted that investor activity had been below historical averages for several years – excluding in March and April this year – which had played a major role in the critical rental undersupply being witnessed across the country.
“Back in 2017, targeted lending restrictions were put in place that prevented investors from accessing lending, which resulted in the supply of rental properties starting to contract,” he said.
“Investor confidence only started to improve about a year ago, but now that rates are rising and borrowing capacity is being assessed at interest rates well above market projections, many are once again unable to secure finance.”
Lachlan Vidler, Atlas Property Group
“There does seem like an element of déjà vu to the current lending situation, which unfortunately is likely to intensify the demand and supply imbalance in rental markets around the nation.”
The ABS data also revealed that mortgage lending is down across the board by 4.4%. However, Mr Vidler said savvy investors and buyers are still in an enviable position compared to the same time last year.
“The current market climate, with fewer buyers and more listings as well as reduced confidence levels, does remind me of the first year of the pandemic,” he said.
“The people who bought a property at that time were able to secure excellent results because they purchased at a time when many others were unable, or unwilling, to do so.
“Likewise, the current inflation pressures are worrying many people, but I believe that they will be shown to be temporary in nature, rather that permanent, in the months ahead.”
