The number of landlords in Australia has skyrocketed, with almost half of new mortgages going to investment properties.
Data from the Australian Bureau of Statistics (ABS) shows lending to landlords has jumped 18.3 per cent in the past year, and almost four in 10 people taking out a mortgage are landlords.
Meanwhile, lending to first home buyers has increased just 13.2 per cent, and owner-occupiers 3.4 per cent.
As if there weren’t enough landlords already.
CoreLogic research director Tim Lawless suggested the increase in investment could help ease the rental crisis.
“Arguably more investment in the marketplace is a positive thing. Hopefully that is introducing more rental stock to the marketplace,” he told ABC Radio on Tuesday.
“Obviously, if investors are purchasing established stock off other investors, it doesn’t necessarily add to overall rental stock.”
The significant growth in lending could be put down to a number of things, including rising house prices, rising population growth, rising rental demand and slower construction. However, the biggest factor driving record landlord growth is the promise of higher profits and — given the rental crisis — an almost guaranteed demand.
ABS data showed that while the value of new housing was slowing down, it was still stronger than this time last year. A report by the Commonwealth Bank showed that investors were responsible for that growth.
“Strong growth in rents and prospects for capital growth as home prices continued to rise are likely to have attracted investors into the market,” the report read.
“The top three states for investor lending over the past year has been WA (up 63.1 per cent), SA (up 41.7 per cent) and Qld (up 22.6 per cent) and these three states have also recorded robust home price growth over the same period.”
In other words, investors are still coming into the property market, but many are shifting their focus towards the smaller cities or regional areas where rental profits are higher. These are also areas more typically sold to first home buyers.
So while you may not be able to afford even a run-down shack, just know investors are swiping up cheap homes for big profits.
