Investors Expected To Become Key Driver In Australian Property Market

Post by NeilMc on January 6, 2010 · Under Australian Economy, Business News, Property Market, home loans, interest rates, mortgages · Comment

A leading mortgage broker, Australia Finance Group (AFG) believes that property investors which accounted for nearly one third of all residential mortgages last month will drive growth in the sector during 2010, replacing the traditional driver of first home buyers.

AFG, which says it wrote as much as 10 per cent of all Australian residential mortgages last year arranged the finance for as much as $650 in property investor loans in December.

Speaking to The Australian, AFG’s general manager, Mark Hewitt said that property investment accounted for nearly $6.5 billion of mortgage approvals during December.

Mr. Hewitt added that compared with the previous three months in the run up to December, the end of the year was a relatively quiet month.

Mr. Hewitt says AFG arranged $ 3 billion worth of home loans during September, compared with December where it helped source financing for home loans totaling $1.9 billion.

“We’ve been warning for months that three rate rises in a row was overkill for a vulnerable market, and the latest figures confirm our fears. We saw a 20 per cent fall last month, compared with an 8 per cent fall in (the corresponding month in) 2008.”

Mr. Hewitt says he believes that the market will begin to become more active in February and that investors rather than first home buyers will be the key driver for the market.

“We don’t expect first-home buyers to be as active as in 2009 when they were driven by various government grants to buy their homes. The first-home buyer market peaked in 2009.”

Mr. Hewitt added that property investors account for some 34 per cent of all mortgages whose finance was sourced through AFG, compared with 25 per cent in the previous year.

“I expect the figure to continue to rise to around 38 per cent, and possibly 40 per cent, which would be a record level. Investors are returning to property investment. They have been coming back since the middle of last year to take advantage of a tight rental market.”

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