Investors have been returning to the market, spurred by recovering property values, historically low vacancy rates, and immigration-driven population growth, according to Australian real estate titan Raine & Horne.
Open for inspection attendance spikes
Raine & Horne reported that open for inspections (OFIs) surged by 25% in October 2023 compared to last year. On the ground, many of the firm’s agents noted that prospective investors fueled the elevated OFI figures.
The real estate group’s observations aligned with Australian Bureau of Statistics (ABS) data showing that new investor housing loan commitments rose by 2% in September 2023 and 2.6% compared to last year.
Additionally, the value of new housing loan commitments has been climbing since February 2023, with the growth in investor loans exceeding owner-occupier loans.
Property listings grew by about 10% compared to October 2022, supported by a 3% increase in property appraisals, conveying a steady flow of properties into the market as the summer holiday season approaches.
Australia’s total property listings
Investors enticed by noteworthy returns
Underlying the heightened investor interest is the double-digit returns being posted by a number of residential property markets nationwide.
CoreLogic figures place total returns above 10% over the past 12 months in:
• Sydney (12.2%)
• Brisbane (12.5%)
• Adelaide (10.7%) and
• Perth (16.1%).
Several regional markets have also experienced gains above 10% over the past year, like Queensland, South Australia, and Western Australia, with 10.7%, 15%, and 12.4% gains, respectively.
Record migration sustaining elevated gains
“Record migration saw an extra 454,4000 people added to Australia’s population in the year to March 2023, and we know that six out of 10 new migrants will rent a home,” said Raine & Horne executive chairman, Angus Raine.
“This is driving down vacancy rates to 1.1% nationally, and while this is creating challenges for renters, record-low vacancy rates are giving investors greater reassurance over their cashflow despite the Reserve Bank of Australia (RBA) hiking rates by 0.25% in November.”
Australia’s residential vacancy rates
Raine also pointed out that property investments have been outperforming other asset classes, further attracting investors.
“Faced with a share market that has delivered price growth of just 0.63% over the past year, and total returns of 4.69%, it is not surprising that Australians are increasingly embracing residential property as an investment that continues to outperform equities and comes with considerably less volatility,” Raine said.
“I would encourage investors who are considering adding property to their portfolio to get into the market sooner rather than later.”
Angus Raine, Raine & Horne Executive Chair
“While the November rate hike may take some of the heat out of the market temporarily, ongoing net migration will put a floor under the market.
“It is testimony to the enduring strength of residential property in Australia that we have seen double-digit gains in so many markets despite a string of rate rises since May 2022.”
Article source: thepropertytribune.com.au