Continuing strong property investment is surprising given the state of the market, according to CoreLogic research analyst Cameron Kusher.
“With investment lending significantly tilted to NSW and considering that in Sydney housing supply is ramping-up, rental growth is at historic lows as are rental yields and the growth cycle is very mature. It is difficult to determine exactly why investment remains so strong,” Mr Kusher said.
“The same could be said for Victoria and Melbourne although it is attracting much less investment activity than NSW.”
Home to the most expensive housing in the country, the combined NSW and Victoria markets continue to make up the lion share of all housing finance commitments in Australia at 67.8 per cent, down only slightly from its 2000 peak of 68 per cent.
Despite the recent implementation of measures designed to curb investment in property, it seems investment lending has not been stemmed.
“With lenders already having tightened lending policies to investors, which was very effective initially, it will be interesting to see what the next steps are, particularly if the recent acceleration in lending to investors continues,” Mr Kusher said.
“No doubt regulators will continue to monitor this data very closely over the coming months. If investment lending continues to accelerate, we may see further intervention in order to cool this segment of the market.”
With a steady supply of new dwellings in Sydney and Melbourne, their property markets are set to face further challenges, Mr Kusher said.
“Of course, the influx of new units over the coming years, many of which have been purchased by investors, will also be a litmus test for the investment market.”