First home buyers are snapping up fewer properties, but the outlook for investors is strong in 2022 – according to the March home lending report from Bluestone’s consultant economist Dr. Andrew Wilson.
Investment loans surge over January
High rents, a national shortage of available properties and strong demand mean investors are rushing to take advantage of the current opportunities for high rental returns.
The number of people taking out investment home loans surged over January. This would suggest that a lot of buyers are jumping on the current thriving property investment market – all signs point to 2022 being a great year to invest.
While the investor share of the total residential home loan market has increased over January, it still remains below the long term average. This means there is potential for further growth and we could very well see an upswing in residential property investment in the not too distant future.
TAS and QLD are the only states where property investment loans are down in January – all other states showed an increase.
Housing demand staying strong across all areas
In spite of declining affordability (as evidenced by the rising affordability index), demand for property is still strong thanks to our faster-than-expected economic recovery and low unemployment rates. As Covid restrictions ease buyer confidence is increasing, which is adding to the demand.
According to Dr. Wilson, most states reported strong annual increases in lending over January, which would indicate that demand for property is high across the country. NSW had the biggest annual increases, followed by ACT and VIC.
Refinancing at record highs
A lot of borrowers are refinancing their home loans at this time, although numbers have dropped since a record high in July 2021. Refinancing still remains above typical levels with the number of people refinancing in January 2022 at 9.9% higher than January 2021. This is likely due to increased property values along with concerns about future interest rate rises.
Are house prices finally starting to stabilise?
We’re starting to see the impact of the decline in affordability on house prices – at least in Sydney and Melbourne. While this might sound alarming for anyone who is worried about the value of their home, the good news is that we’re still likely to see growth, it will just be a bit slower than in 2021. Continuing low interest rates, the further easing of Covid restrictions and the return of mass migrations will keep demand steady and ensure that house prices remain strong.
Want to know more? Read the full report here.