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Is the rise in investor activity enough to offset those exiting?

Is the rise in investor activity enough to offset those exiting?
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New investor loans have surged by 18.8 per cent nationwide, with South Australia, Queensland, and Western Australia leading the way in investor demand.

An analysis by CoreLogic showed that demand from investors is on the rise, with the Australian Bureau of Statistics (ABS) reporting 212,500 new investor loans for the year to September, which represent an 18.8 per cent increase on the previous 12-month period.

Nationwide, high-growth states such as South Australia, Queensland, and Western Australia have been taking the lion’s share of investors’ loan commitments, while Victoria and Tasmania have seen their investors decline with only a 5.1 per cent year-on-year uplift.

Despite the high level of investors looking to buy properties, it also appears that many are exiting the market as well. According to CoreLogic, the number of investor-inferred listings available totals 13,000 dwellings. While that’s well below the peak of November 2021 when values had risen nearly 25 per cent – turning a profit even on short-held properties – it’s still trending quite high and has been steadily climbing since March of this year.

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Across the country, South Australian, Queensland, and Western Australian investor listings were below their respective historic averages, while Victoria and Tasmania saw investors listing at a higher rate exponentially.

In October, new investment listings in Victoria accounted for 29 per cent of the national figure with around 3,800 listings, which were up 10.6 per cent on the previous five-year average.

CoreLogic analysis said that the combination of high interest rates, weak capital growth, and new land tax policies in Victoria is likely pushing investors to sell.

Despite having no significant changes to investment property taxes in 2024, in Tasmania, investors were seen to be exiting the market over the month of October, with listings being 10.3 per cent above the historic five-year average. This is likely due to falling home values in the state coupled with high interest rates.

In NSW, investment listings were 7.2 per cent above the average, but strong new investor demand is likely to offset the reduction in available investment properties across the state.

In its data analysis, CoreLogic also noted a slight shift in investors’ profiles, with first home buyer investor loans increasing.

Additional ABS data suggested that more first-time buyers are purchasing investment properties, possibly as a more affordable way to enter the housing market, although their number remained relatively small with 711 in September 2024.

Although investment activity has grown strongly nationwide over the past year, new investor loan commitments have slightly declined since April 2024. CoreLogic analysis said that the trend could continue if affordable properties with good growth potential become harder to find.

Interest rates may also play a role in investment property demands as higher interest rates may weaken the market. However, stable interest rates will most likely lead to fewer new investments rather than more investors selling their properties.

[RELATED: Investor loans surge 19% as Qld overtakes Victoria]

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