In figures just released by the Australian Bureau of Statistics, housing loan commitments rose 4.9 per cent in the month of May 2021 (seasonally adjusted and the most recently available figures) to a new high of $32.6 billion.
According to the ABS, this growth is being driven primarily by investor housing loan commitments.
“The value of investor loan commitments rose 116 per cent in the year to May 2021, after falling to a 20 year low in May 2020,” ABS head of Finance and Wealth Katherine Keenan said.
The majority of the rise in investor loan commitments - 17.4 per cent - was concentrated in Victoria, a strong show of faith in the resurgence of the Victorian real estate market which had been hit so hard by repeated lockdowns.
Highest growth since early 2000’s housing boom
According to CoreLogic, national home values rose 1.9 per cent in June, pushing annual growth for the recently ended financial year to 13.5 per cent.
In Melbourne, dwelling values rose 7.7 per cent over the past 12 months, including growth of 4.6 per cent over the past three months.
“This is the highest annual rate of growth seen across the Australian residential property market since April 2004, when the early 2000’s housing boom was winding down after a period of exceptional growth,” CoreLogic Head of Research for Australia, Eliza Owen said.
In the year to June, Australian rent values increased 6.6 per cent; the strongest annual appreciation in rents since February 2009, CoreLogic, figures revealed.
In Melbourne, house rents were up 2.3 per cent over the 12 months through to the end of June. Unit rents fell 6.4 per cent over the same period, but that was an improvement on the year-on-year decline in the 12 months through to March. Gross rental yields for dwellings sit at 2.8 per cent for Melbourne and 3.9 per cent for regional Victoria, against the national average of 3.4 per cent
Brad Teal, Founder and Director of Brad Teal Woodards said the return of investors was indicative of record low interest rates, and the search for financial independence in these uncertain times.
“Every collectible asset class is going through the roof at the moment, such as number plates, vintage cars and shares,” he said.
“However some investors are sitting on the fence because of the downward pressure on rents due to the lack of immigration and international students. But balanced with that is that money is very cheap and that the 45 to 64 year old demographic is trying to build financial independence in readiness for retirement.
“They want to be in a situation where they have regular income, in retirement and they don’t want to be subject to the volatility of changes in super and investment returns.”
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