Investors in residential property have come out of hibernation and were the driving force behind the record 5.5 per cent increase in housing finance in March.
And the phoenix-like rise in housing investors has coincided with early signs of a peak in demand for finance by first home buyers whose participation in the housing market appears to be running out of steam. In March first home buyer finance fell by 3.1 per cent , according to the ABS. Investors deserted the residential property market in response to COVID as rents and returns fell as did values in the early stages of the pandemic. The apartments segment was hit particularly hard as immigration disappeared.
Despite historically low interest rates, the banks say they are not seeing any deterioration in the quality of their loan books. This is despite intense competition among bank and non-bank lenders to capitalise on the demand for housing finance driven by low rates.
Negative gearing must end.