The level of investment in the housing market has reached new heights over the past year however, it has been New South Wales where domestic investors continue to largely focus.
Investor activity has surged over recent years, the national data (which is seasonally adjusted) shows that in March 2015, investors committed to $12.9 billion in housing finance. Investment mortgage commitments reached a recent low of $6.3 billion in April 2011 and the rise to $12.9 billion has seen the value of commitments rise 105% in less than 4 years.
Share of national investment lending by state
The state data is not seasonally adjusted and as a result tends to be a little more volatile, nevertheless, it shows $13.5 billion worth of commitments in March 2015. Looking at the breakdown by state, NSW accounted for 46.0% of all investor mortgage commitments nationally. In fact the value of commitments in NSW was greater than the value of all states and territories combined except for WA.
Share of new lending to investors by state
The current growth phase in home values commenced around 3 years ago. Across Sydney in particular there has been a significant rise in investment lending over the past 3 years.
In the following section we look at the results across each state. One thing you will note is that across all states the recent low in investment lending is either January or February of certain years. This time of year is a seasonally slower period for mortgage lending.
In March 2015, investors committed to $6.2 billion in mortgages, a year-on-year increase of 37.2%. Over the past 3 years the value of investment mortgage commitments has increased by 155%. If you remove refinances, investors accounted for 60.0% of all new lending in NSW in March 2015.
Value of NSW new mortgage commitments
Investors committed to $3.1 billion in mortgages in March, a 17.1% year-on-year rise. Investors accounted for 48.6% of new lending in March and the value of commitments is 70% higher over the past 3 years.
Value of Vic new mortgage commitments
At $2.2 billion in March, investor lending has risen by 43.1% year-on-year and is 69% higher over the past 3 years. Investors accounted for 47.2% of new lending over the month.
Value of Qld new mortgage commitments
Investment lending has increased by 28.3% year-on-year to March 2015 to $508.8 million and has increased by 32% over the past 3 years. Investors accounted for 43.0% of new lending in March 2015.
Value of SA new mortgage commitments
Investors accounted for 39.0% of new mortgage lending over the month with $1.1 billion in commitments. Investor mortgage commitments have increased by 4.5% year-on-year and by 31% over the past 3 years.
Value of WA new mortgage commitments
–Investors currently account for 30.5% of new mortgage lending with a total of $70.8 million. The value of investment commitments is 21.3% higher over the year and have increased by 41% over the past 3 years.
Value of Tas new mortgage commitments
After APRA wrote to Australian banks, credit unions and building societies late last year re-affirming sound residential mortgage policies we have recently started to see many banks change their lending policies. A large focus of these changes has been around investment mortgages and over the coming months we should eventually see investment lending start to slow.
Article by Cameron Kusher, CoreLogic RP Data senior research analyst.
In compiling this publication, CoreLogic has relied upon information supplied by a number of external sources and CoreLogic does not warrant its accuracy or completeness. To the full extent allowed by law CoreLogic excludes all liability for any loss or damage suffered by any person or body corporate arising from or in connection with the supply or use of any part of the information in this publication. CoreLogic recommends that individuals undertake their own research and seek independent financial advice before making any decisions. © 2014 CoreLogic.