Chart of the Week
Appears that we've entered a period in 2025 where investors are coming back into the market as prices have been rebounding in Melbourne. Investor loans are 37% of total residential purchases which is actually a fairly normal number for Australia, and higher than seen in, say the USA. It has been a lot higher previously, in particular, 2014-2015, when we were pushing 50%+. This actually led to the regulators capping temporarily investor loans at 10% of banks' flows following the Banking Royal Commission in 2018. Refer to the low levels of investor loans around 2019-2020 in the graph, and the large gap to owner-occupied loans. Sydney was out of control for investors prior to this! I recall up 60% of new loans were to investors for months on end. The issue FHBs can have in a rising market is that they tend to come 2nd at auction, and often off the podium entirely, to an equity enriched investor at auction.
Alluded to above, compared to the USA, Australia's residential investment market is higher as a proportion of GDP - i.e. we have a larger resi investor market here. American resi investors run at about 1 in 5 properties as investment, while in Oz we are closer to 2 in 5 and have been at this level for a couple of decades. Although American investors' appetite for resi property is rising, with recent numbers estimating 27% of all homes sold in Q1'25 were bought by investors, it still a long way to go to reach Australian levels.
We also have double the Public demand, excluding defence, than the US, at 25.7% of our GDP vs. the US at 13.4%, but that's another story.
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