While buying a home to live in remains out of reach for many Australians, investors are flooding back into the housing market.
Data from the Australian Bureau of Statistics (ABS) shows lending to investors – otherwise known as landlords, has jumped almost 20 per cent in the past year. That is, almost four in 10 people taking out a mortgage now are landlords.
The combination of rising house prices, rising population growth (mostly due to migration), rising rental demand and slower housing construction has made housing investment a more attractive proposition according to economist Rachel ViforJ.
While buying a home to live in remains out of reach for many Australians, investors are flooding back into the housing market.
Data from the Australian Bureau of Statistics (ABS) shows lending to investors – otherwise known as landlords, has jumped almost 20 per cent in the past year. That is, almost four in 10 people taking out a mortgage now are landlords.
The combination of rising house prices, rising population growth (mostly due to migration), rising rental demand and slower housing construction has made housing investment a more attractive proposition according to economist Rachel ViforJ.
“If we’ve got huge demand relative to supply that would normally push up rents. And that would be an incentive for investors to invest in rental housing,” Professor ViforJ told the ABC.
Housing data from CoreLogic shows prices in capital cities continue to rise – up 0.6 per cent in March and up 10.2 per cent since January of 2023 when prices began to rise again after a short slump.
CoreLogic’s Tim Lawless said there had been 14-months of consistent growth. “Despite very high interest rates and a cost of living crisis, we’ve been seeing housing values rising ever since, albeit at a slower rate of growth,” Mr Lawless stated.
The cause is widely agreed to be one of supply and demand.
“On the supply side, we’ve had historically low levels of building approvals and so we’ve also had labour market shortages as well in the construction industry,” Professor ViforJ said.
“And on the other hand, we’ve actually got huge demand for housing, in the form of a large number of migrants who have come in over the last year.”
In practical terms that means a house valued at $800,000 in January 2023 that increased by 10.2 per cent would now be worth $881,600. All the while rents have continued to climb, largely due to those low vacancy rates which are the result of a post-COVID boost in migration over the past year.
Mr Lawless suggested the increase in investors could potentially help to ease the rental crisis.
EMPOWERING HUMAN CAPITAL
Arguably, more investment in the marketplace is a positive thing.
Hopefully that is introducing more rental stock to the marketplace.”
Professor Viforj said young people looking to get into the housing market have a financial mountain to climb. “If a young person is looking to buy today, that young person will be facing much higher house prices than say 10 or 20 years ago and also facing much higher interest rates than several years ago,” she said.”The median house price in Sydney is now well over $1 million, and unfortunately, people’s income levels are just not keeping up with house price growth.”