RBA reveals rates of investment
Date Posted: Sep, 2014
If you've been interested in buying investment property in Sydney in recent years, you will have noticed that you are certainly not alone.
The Reserve Bank of Australia (RBA) have just released its bi-annual Financial Stability Review, and collected the numbers on property investment right across the country.
It notes that home loan approvals for property investment currently comprise 40 per cent of all home loans, a figure that echoes investment levels in the early 2000s – a time when home values inflated quickly. Investment loans now account for 20 per cent of overall bank lending.
Australians gearing up
The RBA states that 64 per cent of approvals for investment mortgages are interest-only loans, while only 31 per cent of owner-occupiers take out this type of lending. This is due to the tax deduction incentives that come with buying investment property, meaning people can gear their property to minimise costs. This doesn't work for every property, as it depends on price growth in the area and a borrower's financial situation – a buyers' agent can help you determine what works best when you invest.
How many people invest?
According to the RBA report and Australian Taxation Office data, about 10 per cent of the population over 15 years of age own an investment property, a number that has remained steady over the last decade. However, this number may be due to rise thanks to a strong increase in loan approvals in Sydney and Melbourne over the past year. RBA figures have also recorded an increase in investors aged over 60, who now make up about one-fifth of the total investment pool – perhaps suggesting more people are heading into retirement with a strong investment portfolio.
Is there enough property on the market?
As home loans for investment continue to rise in number, lending for construction has also risen, according to Housing Industry Association figures. This means there is more property available to invest in, and should keep prices moderated.
When you look to invest in property, questions of what kind of loan to use and how to gear your property can be overwhelming – this is where a buyers' agent can step in and help you negotiate the best results for your property.
As the Reserve Bank figures indicate, home values may continue to inflate, so there is still room for you to make an investment in property in the growing Sydney market. For more information, check out our detailed property reports.