Investors go cold on frosty property market

Investors have abandoned the real estate market with the latest ABS housing finance data showing a massive plunge in investment housing commitments, according to the seasonally adjusted figures.

Today’s ABS housing finance data shows investor housing commitments have fallen by 9 per cent, or $1.07 billion between February and March 2018. This is the biggest monthly drop, in percentage terms, since September 2015.

Owner-occupier housing commitments have also dropped by a more modest 2 per cent, which is $405 million in dollar terms from February to March 2018, according to seasonally adjusted figures.

The data reflects how cautious investors have become as property prices fall in Sydney in Melbourne.

Latest CoreLogic figures for April show the median monthly dwelling values have dropped by 0.36 per cent in Sydney and 0.45 per cent in Melbourne.

RateCity money editor Sally Tindall said today’s figures show investors are turning a cold shoulder on the real estate market.

“The falls in property prices in Sydney and Melbourne have investors spooked,” she said.

“Nothing sends investment lending off a cliff quite like a drop in property prices.

“If history is anything to go by, they won’t be out for long. APRA has lifted the cap on investor lending and we’ve already seen a marked drop in investor interest rates.

“Once the market smooths out you can be sure investors will be back doing the Saturday real estate rounds,” she said.

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