New home loan approvals jumped over March, growing 5.5 per cent with around 55 per cent of the increase driven by investors.
That’s a 12.7% increase from the month prior, it was the tenth consecutive month that new investor lending increased and it was the largest monthly increase since July 2003, almost 18 years!
This is a reflection of a tight rental market with a recent report from REA group revealing that more than half of Aussie homes will be cheaper to buy than rent during the next 10 years, at current prices.
Paul Ryan, REA group economist and report author, said “Investors are driven by the same comparison between prices and rents, so the finding that so many units in particular are cheaper to buy suggests there may be profitable investments currently available”.
“It’s really about low borrowing costs, which is expected to stay low for an extended period of time,” he said.
“Interest rates can be fixed below 2 per cent per annum and the RBA has committed to maintaining low interest rates until at least 2024. At the same time, rents haven’t fallen as much as borrowing costs, and this creates favourable buying conditions across the country.”
The report assumes a 20 per cent deposit, as well as all the associated costs of buying, holding a mortgage and the overall costs of renting.
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