Property investment steals the show
A new report from RP Data has shown that property investment has surged in recent times, filling the gap being left by first time buyers who aren't willing to enter the current property market.
This suggests that those buying a property as an investment are currently leading market activity.
Cameron Kusher's blog on RP Data states that as much as 31.4 per cent of the total number of owner-occupier finance commitments in May 2009 was first time buyers. In May this year, that number was down to just 14.6 per cent.
This accounts for roughly 10,000 fewer homes bought in 2009 by first home buyers than there was this year.
In New South Wales, first time buyers made up just 7.3 per cent of all owner occupier finance commitments and in Queensland that number was 9.8 per cent as at July 1 this year. These numbers are just about at record low levels.
Changes to state provided First Home Owners Grants (FHOG) around the country may be partially accountable for these figures.
In Victoria, for example, the $7,000 grant was recently concluded at the end of June, and a new scheme was initiated on July 1 for first time buyers of new residential properties only to receive $10,000 when purchasing a dwelling with a value of up to $750,000.
Similarly, in Queensland, a $15,000 grant is available for first home buyers, but only when the purchase involves a new property and it has a value of up to $750,000.
RP Data's Mr Kusher suggests that while these incentives are positive for buyers, new properties are typically more expensive than pre-existing housing stock, which therefore makes the loan required higher than usual, acting as a disincentive to enter the property market.
This means that with fewer first time buyers snapping up available properties, investors are taking up the opportunity to increase their portfolios.
Mr Kusher points out that "data relating to investment activity in the housing market is only presented in terms of the total value rather than the number of loans, nevertheless the trend is quite clear".
Housing finance commitments were up to $8.4 billion in May 2013, which is the highest level of investment value since January 2008 ($8.3 billion).
These commitments have in fact been growing over the last 12 months, up by 23.7 per cent on a year-on-year basis.
Mr Kusher suggests that "it is probably the hunt for yield or the combination of yield and capital growth prospects, which is driving the increase in investor activity".