NSW investors flock to property market as investor loans reach record levels: APM

Nearly $4 billion in investor finance was approved in NSW over May, says Australian Property Monitors (APM) economist Andrew Wilson, quoting ABS housing finance figures.

This rising demand came as part of continued demand for home loans for investment purposes with investor lending up 1.5% in May to $8.4 billion and 23.7% higher than a year ago.

In total NSW made up 40% of the value of all investor loans approved in Australia in May.

The chart (below) prepared by Westpac to April shows the sharp spike in NSW, but also a longer trend of rising investor lending

Wilson says this is a record for NSW and part of a nationwide trend of rising demand for home loans for investors.

“At the moment nearly 52% of home loan activity in NSW is made up by investors.

“The flight to bricks and mortar is no surprise given low interest rates and a volatile stock market that’s still 25% below its previous peaks,” says Wilson in a video on Fairfax-owned Domain.com.au.

“The number are volatile and do bounce around a bit, but in May loans to residential investors were the highest ever recorded.

There was also a big increase in investor lending in Perth, up 27% on the same time last year.

“All the states have recorded an increase in investors activity over the first five months of this year compared to the first five months of last year,” says Wilson.

Commonwealth Bank economist Diana Mousina notes that the construction component of investor lending has been the stronger part of the story recently, with construction lending surging by 17.2% in May.

“This also bodes well for our residential construction forecasts.  Total construction?related lending is up by 26.5% over the past year,” she says.