Investors are expected to take a dominant role in the market in 2010, according to Mortgage Choice’s chief executive officer Michael Russell.
Mr Russell said the company had experienced an upswing in investor interest over the past five months and expects this to gather pace heading into 2010.
“The company’s home loan approvals show that, in every state, investor demand from July through to November has either remained steady or increased by up to five percentage points,” he said.
“This, along with stronger than expected employment figures in the past three months, is most certainly a positive indicator for healthy growth in the 2010 property investment market.
“The strongest investor borrower demand is coming from the South Australia/Northern Territory areas, at 34 per cent of all our loan approvals in November, followed by Western Australia at 30 per cent, Victoria and Queensland both at 24 per cent, and New South Wales at 22 per cent.
“Overall, the percentage of home loan approvals from our property investor customers has risen from 23 per cent in July 2009 to 25 per cent in November 2009.”
RP Data national research director Tim Lawless agreed that investors as an overall proportion of the market would be likely increase in 2010.
“The ‘normal’ rate of investment in the property market is where investors account for about one third of all transactions and in all likelihood we will see investment in the Australian property market move back to this long-term average and more than likely surpass it,” Mr Lawless told Mortgage Business.
He said investors were much less likely to be influenced by interest rate hikes due to the tax benefits associated with negative gearing.
“Additionally, investors will be motivated by improvements in rental rates which are likely to provide stronger rental yields over the coming years. There will be fewer first home buyers in the market place, a factor that investors will welcome as it means less competition with this segment going forward,” he said.
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