Investors, first-home buyers eager to secure properties as prices continue to rise

Megan Lieu
Megan Lieu

Following 14 months of consecutive home price growth and the recent pause on interest rates, investor and first-home buyer activity is rising and is showing a marked increase from the previous year.

New lending data from the Australian Bureau of Statistics show that the value of new loan commitments for housing has risen by 13.3% to $26.4 billion during the year to February 2024.

This was driven by strong annual growth in loans to first-home buyers and investors. They respectively increased by 20.7% and 21.5% over the year.

Investor lending now accounts for 36% of all new lending which is the largest share since January 2017, while home buyer lending constitutes close to 19% of all new lending. This share is below the pandemic peak but well above the 10-year average of 16.4%.

Not only are the aforementioned buyers making up a larger proportion of new lending but there has also been a recent pick up in their enquiries to agents.

A comparison between the 2023 December quarter and the 2024 March quarter shows that there has been an 11% increase in enquiries from investors and a 7% increase in enquiries from first-home buyers during this time.

But what does this all mean?

This reflects the fact that demand from these buyers is strong and is likely to rise despite the borrowing conditions being more difficult than what was seen during the pandemic and this could be due to a number of factors.

While interest rates are now higher compared to previous years, they have stabilised recently and the market predicts that we may be at peak with decreases to come. This has removed some uncertainty in the market, and lifted the confidence in those who are looking to buy.

As prices continue to rise, some buyers may want to secure properties before prices increase further and competition heats up.

More insights from the expert team at PropTrack

The tightness of the rental market is another potential factor contributing to the growth in demand from buyers. Vacancy rates are currently at a record low nationally and as weekly rents surge, those who are renting may shift to the buy market.

Sentiment has improved for buyers and sellers in recent months and this is reflected in the persistent growth seen in the market. As demand continues to remain strong, we expect home prices to make further gains in the coming year.

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