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The latest data from REIA shows that more investors are buying property. According to the ABS, investor loan commitments reached their highest level since 2015 in May – and lenders have increased their appetite accordingly, with many dropping their investor interest rates despite hiking their fixed rates for owner-occupiers.
According to REIA president Adrian Kelly, property investor activity has gone on an interesting journey throughout COVID, with many cashing in on their investments.
“Essentially what happened was, investors stopped buying last year,” he said.
The uncertainty of COVID meant many tenants lost their jobs and were at risk of significant hardship.
“What we saw was a whole lot of new tenancy legislation introduced around COVID, mainly around non-evictions of tenants who had suffered employment issues and couldn’t afford to pay the rent,” said Kelly. “There was a fair bit of uncertainty from an investor point of view. The silver lining in that was that first home buyers had a wonderful time. They were back at the highest levels that we’d seen over the last three decades.
“But the two-speed economy kicked in and the residential property market just took off. A lot of those investors decided to sell their rental properties and essentially cash in – and that’s still happening now.”
Investors weren’t sure how long the uncertainty of COVID was going to last, so a lot of them decided to sell and bail themselves out rather than risk being stuck footing the bill for their investments while their tenants struggled to pay the rent.
While Kelly couldn’t provide exact numbers, he said it had been a widespread trend across the country last year.
Despite the continued uncertainty caused by COVID, buyer activity this year has come with a solid surge in investor purchases – as well as a good dose of irony.
“The pendulum has swung back around, and investors are buying again in 2021,” said Kelly. “And that’s part of what’s causing housing affordability issues for first home buyers.”
Kate McIntyre is an online writer for Mortgage Professional Australia. She has a wealth of experience as a storyteller and journalist for a range of leading media outlets, particularly in real estate, property investing and finance. She loves uncovering the heart behind every story and aims to inspire others through the artful simplicity of well-written words.
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