Loans for buying investment properties up

Growth in lending for buying investment properties continues to outpace that for owner-occupied housing, the latest ABS statistics reveal.

Loans approved for owner-occupied housing rose 1.8 per cent in September, compared to a 3.7 per cent rise in approvals for investment. Property investment finance commitments were 25.4 per cent higher year-on-year.

The ABS figures also reveal it was the first time ever the value of monthly property investment loans ($11.9 billion) was greater than that of new owner occupier loans ($11.8 billion).

CommSec economist Savanth Sebastian said the housing sector remained strong, with the number of loans for home construction up 3.1 per cent.

“There is still ongoing strength in the housing sector in terms of a lift in the supply of housing,” he said. “The lift in property prices is raising the average loan size.”

Investor activity in established homes has been the “clear standout” – up more than 80 per cent in three years – according to investment bank UBS.

“(These loans) continue to increase sharply towards half of all home loans,” UBS analysts noted.

Portfolio Management Services has focused its investment property buying on established properties in greater Melbourne, Sydney and Brisbane.

The company has produced annual returns of 12.2 per cent since 1972, buying investment properties that meet its successful criteria on behalf of clients. These include buying investment properties close to major infrastructure and capable of providing above-average rental returns.

A good investment needs to be in demand by both owner occupiers and tenants, said Portfolio’s managing director Jock Bing.

“Traditional small houses, townhouses and boutique or period-style apartments are always in demand. That is why our vacancy rates are at such low levels,” he said.

“Not only do tenants want to rent these properties but, when the time comes, both owner occupiers and future investors are also in the queue to purchase them.”

Portfolio’s team of experienced investment property buyers are still finding bargains in the current market. To discuss you property investment goals with the team, contact Portfolio on 03 9621 1044.