The Australian housing market continues to be driven by investment activity according to Tim Lawless, RP Data’s research director in his latest Property Pulse.
After two years of strong values growth across Australia’s property market, symptoms are emerging that the market has moved through its peak growth phase.
On investment housing, Lawless says that, subtracting refinances, the proportion of total lending made up by investments in April was 47.8%, the highest level since the tail-end of the 2001-02 boom.
Lawless noted “Historically, the level of investment activity is well above average levels.” That implies he thinks investment demand for loans will fall and he backs it up with this stunning statistic:
Since values reached their recent trough in May 2012, home values increased by 16.1 per cent to April 2014 compared to a 59.2 per cent rise in the value of investment lending.
Which is another warning to investors, it seems.
However, not to be misunderstood, Lawless finishes by saying: “The value of diligent research and a carefully considered purchase decision is all the more important when values aren’t rising as fast.”