As we welcome the Autumn season, the real estate market is buzzing with activity. Auctions are seeing enthusiastic participation and clearance rates are soaring, indicating a robust start to the season.
The first major auction Saturday of 2024 witnessed an impressive number of homes going under the hammer, the second-highest since 2008. This suggests that homeowners are confident about selling, and buyers are eager to compete, ensuring campaigns reach their full potential.
The remarkable property price growth across most of Australia in 2023, along with anticipated interest rate cuts, are fuelling this confidence. On the first big auction Saturday, we saw a surge in active bidding, with 75% of registered bidders participating, a significant increase from the usual 50%.
Interestingly, we’re seeing a resurgence of investors in the market. Recent data from the Australian Bureau of Statistics (ABS) reveals a 20.4% increase in the value of investor loans over the past year.
In December alone, over 16,600 loans amounting to $9.5 billion were approved for property investors. Additionally, 629 loans were issued to first home buyers investing in property, reflecting the growing ‘rentvesting’ trend, which has seen a 20.7% increase over the past year.
Rentvesting allows young buyers to continue living in amenity-rich inner-city areas while investing in more affordable regions. So, what’s driving this renewed investor interest?
Rising rents are a key factor. With the median Australian rent crossing $600 per week, an increase of almost 40% since August 2020, landlords are finding it easy to secure good tenants and earn higher rental income.
Last year’s unusual scenario of home values rising alongside interest rates has also encouraged investors. Traditionally, rising rates dampen home values, but the current supply-demand imbalance has altered this dynamic.
Investors are now more open to exploring different markets. The pandemic-induced growth in regional property values has highlighted the potential for long-term capital growth in these areas, especially with the increasing feasibility of remote work.
Research indicates that the average distance between landlords and their investment properties has doubled in the past year, suggesting a rise in ‘remote investing’.
In conclusion, the current market conditions present a unique opportunity for both homeowners and investors. As we navigate through 2024, it will be interesting to see how these trends evolve.