New data exposes major change in NSW housing market buyers

Competition for property has been rising amid a surge in investor buying.

Investors have been flooding into the NSW housing market following this year’s interest rate cuts and the increased competition for housing at a time of dire building activity could be forcing up prices.

New PropTrack and Terri Scheer figures revealed lending to investors over the year to June rose by 12 per cent annually, with investors accounting for 43 per cent of all loans issued over the period.

Investors’ share of new loans over the year was the highest since 2017 – the peak of a then investor-driven housing boom that saw Sydney prices balloon at one the fastest rates in the city’s history.

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Recent investor spending at a time of crippling housing shortages may have helped push up prices once more, with the median cost of a Sydney dwelling jumping $71,000 over the year to October.

Such price rises meant property was one of the most reliable income generating assets for Australians.

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Terri Scheer executive manager Carolyn Parrella noted that more than 90 per cent of the investment properties sold in the past year changed hands for a price higher than what the sellers paid.

REA Group economist Angus Moore said rental shortages and an expectation of rising prices were key drivers of the higher investor activity.

“Rental market conditions remain very tight, and rents have grown rapidly in recent years. That’s likely encouraging investors to buy in,” he said.

“With markets expecting at least one further rate cut by the Reserve Bank and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year.”

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Housing construction levels in NSW have remained sluggish.

Mr Moore added that high levels of investor spending in the housing market was a “fairly modern feature”.

“If we wind back 50 years, in the late 1970s, just one in 25 tax filers reported rental income,” he said, noting that this more than tripled by 2022/23, the most recent financial year with available tax data.

Mr Moore said about two thirds of investors owned just one rental home, roughly one in five owned two and only 4 per cent owned more than four.

Investors with six or more properties accounted for just 1 per cent of the group.

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Rental shortages have encouraged more investor buying. Picture: Adam Yip

REA Group economist Angus Moore said most investors owned just one property.

Close to three quarters of investors were between 35 and 64 and most had higher incomes than the Australian average.

Investors were getting older, Mr Moore explained.

“Two decades ago, under 40s comprised the largest share of investors, today they are the smallest group,” he said.

“In contrast, the share of investors that are aged over 60 has effectively doubled since the early 2000s.

“With the population continuing to age, it’s likely the average investor will keep getting older too.”

SYDNEY’S TOP SUBURBS FOR INVESTORS

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Source: PropTrack

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