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The latest round of Australian Bureau of Statistics’ (ABS) lending data has led to the Territory’s peak real estate body sounding the alarm over sustained investor retreat from its market.
According to Real Estate Institute of the ACT (REIACT) chief executive officer, Maria Edwards, February’s findings, which had nationwide investor financing dropping 0.5 per cent, also highlighted that the total number of ACT investor loans for housing (excluding refinancing) dropped to 291 during the second month of the year.
While new investor loans for housing saw a peak 12 months ago, Ms Edwards conceded that “the number of investor loans in Canberra have declined month-on-month ever since.”
The peak month for investor loan commitments in the ACT was March 2022 when 533 were issued.
She revealed the results, which represented a 36.9 per cent decline in the value of new investor loan commitments, meant investor financing has dropped to its lowest level in the territory since October 2020.
Falls in the value of new investor loan commitments also occurred in the Northern Territory, where they fell 27.8 per cent, NSW (6.9 per cent), and Queensland (4.9 per cent), while the figures rose 17.2 per cent, 7.9 per cent, and 3.4 per cent in Tasmania, South Australia, and Western Australian respectively.
Total new investor loans by value (original) in the ACT fell 23.83 per cent from January, when they were valued at $199.7 million, to February, where they rested at $152.1 million.
Ms Edwards acknowledged that while smaller jurisdictions often experience less volatility in response to changing market conditions, the latest figures represent “not just a one-off drop, but a rapid decline in the space of 12 months.”
She believes the continued downward trajectory of investor loan data indicates how a combination of rapidly rising interest rates, cost-of-living pressures, increasing regulation have combined to impact investor confidence in the market.
Labelling the figures as “concerning,” she noted the compound existing pressures within the market, including tight vacancy rates and a continued shortage of rental properties also impacting the region.
Ms Edwards added that the data also reflects “anecdotal evidence from our members indicating landlords are visibly exiting the market.”
“We can see the gap between supply and demand has a major impact on the rental market and as a consequence disproportionately impacts lower income households in Canberra,” she said.
Citing recent research from the National Housing Finance and Investment Corporation (NHFIC), which suggest a national housing supply shortfall of 100,000, as indicating Australia’s housing crisis is a “longer-term problem to solve,” Ms Edwards insisted that “it’s critical that state and territory governments are actively committed to supporting the property industry if we seriously want to address housing supply.”
“While we welcome the increased national focus to address the housing shortage, we need to encourage investment in Canberra now, if we hope to manage demand and increase supply of rental properties in the medium term,” she concluded.
REB recently reported that investor lending was down nearly 40 per cent in Queensland.
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