Australian Bureau of Statistics (ABS) figure shows investor lending up 12.7% in March, compared to a 0.9% dip in first home buyers.

As expected from the rise in property prices, lending figures in March and April showed home buyers dropping slightly.

Investor lending committed to $7.8 billion in loans in March 2021 — accounting for half of the monthly rise. Data from ABS suggest it’s the fastest growth in investor lending in 18 years.

However, the government wants more first home buyers (FHBs) purchasing property than investors. Investors are often a driving force behind price rises and this can lead to FHBs being priced out of certain markets.

If this trend continues the government or a regulatory body may step in with some regulations for investors, like the removal of negative gearing or something similar. The Reserve Bank of Australia (RBA) and Australian Prudential Regulation Authority (APRA) will be watching lending numbers closely over the next few months.

“The RBA and APRA are watching developments in the housing market but both have stressed that the focus is on lending standards and financial stability issues rather than house price movements,” said CBA economist, Kristina Clifton.

Investors accounted for a quarter of new lending, a nine-month high despite high vacancy rates.

Rental vacancy returns to pre-pandemic levels

Rental vacancy returned to pre-pandemic levels during April, but some areas are still looking at one in ten properties sitting un-tenanted.

Melbourne remains the worst market with a drop to 4.2% — almost double the vacancy rates of Sydney.

Investors will care a lot about rental vacancy rates because without a tenant an investment property is not a solid asset.

Melbourne is still struggling, but Sydney has recovered from a lot of the issues it had during COVID and seems to be returning to normal now.

Get your pre-approval in place before putting in an offer!

Having a pre-approval ready and being clear about your finances is important for buyers before putting in an offer on a property. This is especially true for first home buyers who may not be experienced in bidding or buying property.

You might get knocked back by lenders if you make successful bids at auctions without having your borrowing limit pre-approved. This also means that you could lose your deposit.

Meanwhile, it’s good to check the rental vacancy rates and yields as an investor before looking at an investment property.

Please talk to us on 1300 889 743 or enquire online to get a better chance at securing a pre-approval.