Investor activity in the property market grew in 2023, with the number of new housing loans to investors 10.4 per cent higher than 2022 and 37.3 higher than 2021, according to the latest lending data from the Australian Bureau of Statistics.
Monthly loan figures peaked at 2,211 in November, the highest on record.
It is fantastic to see growing investor participation in the market; WA’s rental market is very tight and needs every rental property it can get.
On paper this looks like supply in the rental market should be increasing.
Unfortunately, our data does not yet show an increase in the number of rental properties. There is more to the equation than just a rise in lending figures, such as what investors are buying, what their intentions are and what existing investors are doing.
Firstly, existing investors are still selling. The new investors showcased by the increased lending figures are essentially replacing those investors and maintaining, not increasing rental supply.
Our members have been reporting a lot of interest from Eastern States investors. However, some of these investors are buying in WA with the intention of moving here in a year or two. This will then remove a property from the rental pool.
Secondly, the figures show there was a strong investor focus on construction, with the number of loans for land rising 21.0 per cent and the number of loans for building rising 52.7 per cent in 2023.
By comparison, the number of loans for existing properties rose just 5.9 per cent.
Like our members, builders and developers have also been reporting strong sales to Eastern States investors.
Increased construction sales to investors, whether they’re in the Eastern States or in WA, is good news in general. It will eventually add new homes to overall housing supply and will also boost rental supply. However, this will take time.
In a best-case scenario these homes will come to the market in about a year, worst case it will take significantly longer.
And you also need to consider these investors’ intentions. Some may move to Perth at some point and that property will no longer be available for rent. There is also the possibility these investors will sell the homes when they are completed to take advantage of capital growth.
Before we see a significant improvement in the rental market we are going to need to see ongoing growth in investor figures, the completion of homes under construction, and a reduction in the number of investors leaving the market.
Joe White
REIWA President
