Australian home loans up for 3rd consecutive month in April

Australian property investors saw a third consecutive monthly increase in home loans in April, with a faster growth rate compared to owner-occupiers, driven by escalating residential rents that enhance the appeal of housing as an investment, Bloomberg reported.

The Australian Bureau of Statistics reported that the value of fresh loans to home investors surged by 5.6 per cent to A$10.9 billion ($7.3 billion), marking a 36.1 per cent increase from the previous year.

“This likely reflects expectations of higher rental yields and the greater borrowing capacity of investors,” remarked Mish Tan, head of finance statistics at the ABS.

The most robust markets were observed in New South Wales and Queensland, with investor lending rising approximately 44 per cent and 46 per cent, respectively, since April 2023.

CoreLogic Inc., a property consultancy, revealed earlier this month that rents in Sydney and Melbourne surged by 8.9 per cent and 9.7 per cent, respectively, from a year earlier. This outpaced annual house price gains of 7.4 per cent and 1.8 per cent in the two major cities.

According to CoreLogic data, gross rental yields across the eight capital cities with rents escalating more rapidly than home values have climbed to 3.56 per cent—the highest since August 2019.

“For most investors, higher yields will be welcome considering variable interest rates for investor loans are averaging 6.7 per cent,” noted CoreLogic research director Tim Lawless. “Given the high cost of debt, a large portion of leveraged investors are probably recording a cash flow loss despite the substantial rise in rental income.”

Today’s data also revealed a 4.7 per cent increase in the value of new loans to owner-occupiers, excluding first-home buyers, reaching A$13.1 billion in April, up 18.8 per cent from a year ago.