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Andrew Wilson: Investors continue to drive Canberra’s property price growth

Investors continue to drive residential property.Investors continue to drive residential property. Photo: Louie Douvis

Canberra residential investors continue to charge into the local market and remain a key driving force for recent strong price growth.

Latest Bureau of Statistics data reveals that the value of residential investment loans soared by 24.1 per cent over May to $229.5 million.

Although a solid May increase in investor lending was expected following the holiday month of April, the result was 13.5 percent higher than that recorded over May last year and the highest monthly total so far this year.

The ACT has recorded residential investor lending of $948.7 million over the first five months of this year, a sharp increase of 24.6 per cent compared with the same period last year.

The full year to date growth comparisons also continue to escalate up by 18.2 per cent to the year ending May compared with the previous year and with the trend still rising.

The latest NSW investor lending data from the ABS was also compelling, with growth over the month increasing by 30.8 per cent to $7.1 billion.

The NSW May total was the highest ever recorded for that month and the third highest monthly total on record. A total $22.6 billion residential lending has now been approved over the first five months of this year in NSW – 24.3 per cent higher than that recorded over the same period last year.

Similar to the ACT, the full year to date growth comparisons continue to rise, up by 15.8 per cent to the year ending May compared with the previous year. Investor lending in NSW now accounts for 50.5 per cent of all lending to investors nationally.

Reflecting concerns over perceived housing risks from a notional spectre of sharply rising interest rates, the Australian Prudential Regulation Authority has instigated policies designed to tighten bank mortgage lending to residential investors.

The latest ABS data indicates that, despite lending restrictions, investor activity remains unquestionably strong in the ACT and NSW. This will be a relief for tenants in those markets where vacancies are scarce and rents are rising.

Dr Andrew Wilson is Domain Group chief economist.Twitter: @DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.