Investors are picking up the slack as first home buyers – who have been forced to take out increasingly large loans to buy a property – exit the market.
Nerida Conisbee, chief economist at Ray White, said investors accounted for around one-quarter of all transactions through its network over the weekend on both the buy and sell side, a trend consistent across all states.
“We’ve certainly seen a big pickup in investor activity – they weren’t active last year,” Ms Conisbee said.
“We know they pulled out of the market primarily because prices were falling, and they weren’t getting any advantage from grants such as HomeBuilder.
“But they’ve really surged back into the market this year.”
She said that Ray White data shows that investors are generally selling to other investors.
“The equal number of investors selling compared to the equal number of investors buying would suggest that properties that are rental properties are sold as rental properties and remain rental properties.”
Ms Conisbee added: “We haven’t seen any migration numbers and first home buyers have backed out and, given the strength in the market, it is likely to be mainly investor activity that is pushing up pricing in cheaper suburbs.”
Affordability is a key reason for growing absence of first home buyers, who have borne the brunt of Australia’s surging home prices.
Credit data analysis by Equifax reveals first home buyer home loans rose by an average of 18 per cent in the 12 months to the end of September, compared with a 12 per cent increase for existing mortgage holders.
The average loan taken out by a first home buyer in Australia is now $493,000 – an increase of $76,000 in the 12 months to the end of September.
Tasmanian market entrants were by far the worse off, with their average loan size increasing by 38 per cent, or $101,000, reaching $367,000.
Tasmania beat South Australia, where the average first home buyer loan is $346,000, up 14 per cent, and the Northern Territory, the only place where first home buyer loans declined, falling 6 per cent to $361,000.
By far the largest mortgages are in NSW, where first home buyers are borrowing an average of $624,000 (+19 per cent), followed by the ACT on $523,000 (+18 per cent) and Victoria at $510,000 (+22 per cent).
Then there’s a significant drop to Queensland, $414,000 (+14 per cent) and Western Australia $385,000 (+9 per cent).
“We haven’t seen these kinds of rises in the market in the past 20 years,” said Kevin James, general manager advisory, analytics and consultancy services at Equifax.
Mr James said “low interest rates, increased savings and super withdrawals” combined meant first home buyers were able to borrow more as prices rose.