Investors building investment property at all time high
Australian Bureau of Statistics (ABS) housing finance figures released in September 2015 showed that while lending to owner occupiers remains below the peak which occurred nearly a year ago, lending to investors to buy new homes jumped by 11.7% in July 2015 to reach a new all-time high.
Housing Industry Association (HIA) economist, Diwa Hopkins highlights the importance of these figures.
“New home building had been a key element to the broader domestic economy’s continual growth in recent years, but critically, it has also made meaningful headway in satisfying the housing needs of Australia’s growing population.
“Investors have played a major role in the current new home building cycle, contributing a larger share of new housing supply than has historically been the case.”
These findings are an important confirmation that investors are continuing to identify the potential upside of investing in new homes, compared to other types of investments and despite reports of a slowing property market in WA.
Peter Gianoli, General Manager Investor Assist, is pleased this data is available in black and white.
“We work with investors every day and we can see the strong level of enquiry and we know there is growing interest in buying new or building an investment property. But because the Perth property market has softened in general over the past twelve months people automatically assume investor activity is slowing as well but this is just not the case.
“It is not a marketing tactic and we are not trying to paint a rosey picture just to get investors through our doors. Investors are coming to us because buying or building an investment property is an attractive proposition for investors and can yield solid results, particularly in an economic environment where money is being shaved off the stock market on an almost daily basis.”
“I am pleased the HIA is drawing attention to these results because it gives investors greater confidence they are not alone with their decision to focus on property investment.”
Why are investors building investment property?
Peter identified several key reasons why investors are turning their attention to buying or building investment property:
- Interest rates are at an all time low and borrowing money has never been so affordable;
- Investors can claim full depreciation benefits for building an investment property or buying a brand new investment property;
- Australia has a growing population and a strong demand for housing;
- Despite a softening in the Perth property market, many suburbs are experiencing strong capital growth which is outperforming returns available from other types of investments;
- Australians are placing a stronger emphasis on planning for their retirement and view building an investment property or property portfolio as a reliable way to increase their financial security;
- Buying or building an investment property via a SMSF is growing in popularity in WA;
- The Australia Stock Market is showing signs of volatility and losses;
- Building an investment property is an affordable option with properties available from as little as $300,000;
- There is plenty of expert support and advice available within the property industry to help investors to build an investment property with confidence.
Is building an investment property right for you?
As the ABS figures show, building an investment property or choosing to buy a new investment is growing in popularity with many Australian investors but this does not mean you should rush out and invest. If you are thinking about buying or building an investment property you need to develop an investment strategy that is right for you.
To find out more, contact an Investor Assist Property Investment Specialist here and benefit from our free Property Investment Analysis. This service is free of charge and will identify an investment strategy that is best suited to you.