Investors return to residential property

Author: AAP
Date: May 9, 2007
Publication: AAP

The percentage of mortgages being sold to investors has hit record levels for the second month in a row in an indication that residential property is "back in favour", a new survey shows.

In April, 33.8 per cent of new mortgages were sold to investors as opposed to owner occupiers, a rise of nearly one per cent over March's previous ll-time high of 32.9 per cent, according to the latest AFG Mortgage Index.

"It is seldom that we see the indicators for every state looking positive, but right now that's exactly what's happening," AFG sales and operations general manager Mark Hewitt said.

He said flat interest rates meant property markets on the east coast were "building up momentum".

Western Australia (with 47.9 per cent of mortgages going to investors) and Queensland (32 per cent) were driving the market, but record growth in NSW (35.8 per cent) and a resurgence in Victoria (22.6 per cent) and South Australia (28.5 per cent) were mainly responsible for the back-to-backrises.

NSW jumped 1.4 per cent in the month from March's 34.4 per cent level.

Australia-wide, the average home loan now stands at $307,448.

The highest loans are in NSW (averaging $362,962) and WA ($352,828), with the lowest being found in South Australia ($231,250).

Interestingly, loan valuation ratios - the value of a loan as a percentage of a property's worth - are lowest in WA (55.4 per cent) and NSW (67.7 percent), where the cost of housing is highest.

AFG's Mortgage Index is not definitive but is usually strongly indicative of more comprehensive figures released later each month by other institutions.

Source: AAP