Market still near historic high despite property investment slowdown in March quarter
Australia’s property market may finally be cooling from the record highs seen at the end of 2016, with new figures showing a 4.4% decrease in investment for new housing in the March quarter.
The figures released yesterday by the Housing Industry Association (HIA) show that investment in housing is back down to a similar level to that of early 2016, which still remains relatively high by historic levels.
“A decline in investment in housing last quarter is consistent with other indicators that activity is decelerating in the sector,” said Shane Garrett, HIA’s Senior Economist.
According to Garret poor weather throughout the quarter didn't help results, but continued construction and development would still see levels of investment stay consistent in the near future.
“In the context of the residential building cycle cooling off a record high, investment in apartment building is holding up with a record number of new apartments still being constructed. This is helping to meet the strong demand in the housing market,” he said.
“Residential construction, augmented by the substantial multiplier impact of industry activity through to the broader domestic economy, has been a mainstay of Australia’s economic growth during the last four years. It has been a strong driver for economic growth.”
Adding to the slowdown in property investment, could be the recent regulations introduced by APRA, which require banks to limit interest only lending to 30% growth. In response, a large number of banks have increased rates on interest only loans, particularly for investors.
For instance, Mozo’s database shows at the time of writing the average rate for an owner occupier paying both the principal and interest on a $300,000 loan is just 4.44%, compared to the average rate for an investor paying just the interest at 5.01%.
While it may be tougher as an investor to secure a competitive rate than it was 6 months ago, the good news is in the Mozo database there are still a range of home loans available under the 4% mark.
Top interest only loans for investors (for an investor making interest only repayments on a $300,000 loan with and 80% LVR).
- 3.89% - BCU OMG Home Loan
- 3.89% - Homestar Variable Rate Loan
- 3.94% - Reduce Home Loans Investor Rate Buster
- 3.99% - FreedomLend Variable Home Loan
- 4.09% - State Custodians Low Rate Home Loan
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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