Raine & Horne data indicates that attendance at ‘open for inspections’ (OFIs) has jumped 25.0% in October 2023 compared to the same month last year. Anecdotally, many Raine & Horne agents are reporting that increased OFI numbers are driven by buyers seeking an investment property.
The uptick in investor interest coincides with Australian Bureau of Statistics* (ABS) data confirming a 2.0% rise in new investor housing loan commitments in September 2023, and a 2.6% increase compared to last year. The value of new housing loan commitments has trended upwards since February 2023, with total growth in investor loans now exceeding owner-occupier loans.
On the supply side, Raine & Horne reports that property listings have grown by nearly 10% compared to October 2022, backed by a 3% rise in appraisals, signalling a continued flow of properties into the market as we approach the summer holiday season.
Impressive gains attract investors
The return of investors to the property market is likely underpinned by double-digit returns being recorded across a number of residential property markets nationally.
CoreLogic* reports total returns (rental yield plus capital growth) in excess of 10.0% over the past 12 months in:
A number of regional markets have also recorded gains in excess of 10% over the past year including Queensland (10.7%), South Australia (15.0%) and Western Australia (12.4%).
Mr Angus Raine, Executive Chairman of Raine & Horne, said, “Record migration saw an extra 454,4000 people added to Australia’s population in the year to March 2023*, and we know that six out of 10 new migrants will rent a home*.
“This is driving down vacancy rates to 1.1% nationally*, and while this is creating challenges for renters, record-low vacancy rates are giving investors greater reassurance over their cashflow despite the Reserve Bank of Australia hiking rates by 0.25% in November.”
The robust returns on property relative to other asset classes are also acting as a drawcard for investors.
“Faced with a sharemarket that has delivered price growth of just 0.63% over the past year*, and total returns of 4.69%*, it is not surprising that Australians are increasingly embracing residential property as an investment that continues to outperform equities, and comes with considerably less volatility,” said Mr Raine.
The exceptional gains in home values in the past year is also allowing homeowners to capitalise on the growing equity in their homes to build personal wealth through property.
“I would encourage investors who are considering adding property to their portfolio to get into the market sooner rather than later.
“While the November rate hike may take some of the heat out of the market temporarily, ongoing net migration will put a floor under the market.
“It is testimony to the enduring strength of residential property in Australia that we have seen double digit gains in so many markets despite a string of rate rises since May 2022,” concluded Mr Raine.
