Invest
Further regulation ‘highly likely’ as property investment persists
With property investors remaining undeterred, intervention might be necessary to cool segments of the market.
Further regulation ‘highly likely’ as property investment persists
With property investors remaining undeterred, intervention might be necessary to cool segments of the market.
Despite low rental yields, a mature growth cycle and supply ramping up in the major markets of Sydney and Melbourne, AMP’s half yearly report boasted a residential mortgage book worth $15.4 billion, up $808 million on the first half of last year.
During a media briefing announcing AMP’s half-year results, chief executive Craig Meller acknowledged that a growing property loan book had been the driver behind an underlying profit of $513 million.
“The bank maintained a competitive market position with total loan book growing … this growth is largely in owner-occupied mortgages with strong growth in customers joining us via brokers and advisers,” Mr Meller said.
“Growth in investment property lending is continuing to build since the bank recommenced investment lending in November last year.”
Since their reintroduction in November last year, investment property loans have grown to represent over a quarter of AMP’s total loans, according to the half-yearly report.
“Owner-occupied loans made up 73 per cent of the mortgage portfolio at 30 June 2016, while investment property loans were 27 per cent. Management continues to target total lending growth at or above system, subject to regulatory growth caps, return on equity hurdles, and funding availability,” the report said.
Meanwhile, AMP chief economist Shane Oliver said continued investment in the property market is a sign investors haven’t been deterred.
“[The investment is] basically coming from investors looking for decent returns given very low interest rates and expectations that property prices will continue to rise in Sydney and Melbourne, albeit with a bit more caution creeping in and lots of risks that they won't,” Mr Oliver said.
“Maybe investors are sceptical of such concerns or are just prepared to look through any short-term risks. But low interest rates are probably a big part of the explanation along with the fact that many tend to form expectations for the future on the basis of the recent past. In other words, investors may be simply extrapolating past price gains into the future.”
Meanwhile, apartment oversupply continues to endanger existing unit prices.
“Apartment oversupply is likely to put downwards pressure on prices in areas where it is a significant. This could see unit price falls of 15-20 per cent, not necessarily straight away but in the years ahead,” Mr Oliver said.
In light of this, he said future regulation may be implemented in a renewed effort to cool segments of the market.
“Further regulatory intervention to slow investor demand is highly likely if the Sydney and Melbourne property markets continue to hot up again as they look to have done in recent weeks and months.”
However, Mr Oliver said the longer term outlook suggests mature property markets will continue to cool.
“It is likely to cool in Sydney and Melbourne as the property market in those cities cools down and prices eventually go through a down cycle. Other cities which have not seen a lot of price growth are likely to be less affected.”
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
