A constricting rental market will spark heavy investment inflows into residential property in the next year, a survey has found.
The number of Australians planning to buy homes during the next 12 months has soared by a third – a record increase – from 577,000 in the September 2006 quarter to 779,000 in the December 2006 quarter. The research was carried out by Wizard Home Loans.
According to Wizard Home Loans chairman Mark Bouris, almost two-thirds of those who want to buy an investment property are new to the market.
“The appeal of high returns has helped lure borrowers to the property investment market. However, adequate supply of property will be the critical issue affecting the vitality of the market in the next 12 months,” he said.
BT Financial chief economist Chris Caton also believes housing supply may pose a problem. Speaking at a Financial Services Institute of Australasia event, he produced Australian Bureau of Statistics figures to show new housing approvals in Australia had experienced a long, steady downturn in the past five years.
“In net terms, all of that downturn in housing approvals is accounted for by one state and you’re sitting in it [New South Wales]. New housing approvals in New South Wales are at a 30 year low,” Caton said.
Caton believes investor interest in the residential property market has dwindled, due in part to new superannuation rules offering more tax effective investment strategy. At their peak, residential property investors made up 48 per cent of the market. This figure has dropped to 38 per cent, Caton said.
