Market Update

Monday, March 01, 2010

According to a recent article in Your Mortgage Magazine, Brisbane is now one of the country's premier investment hotspots. After a lacklustre preformance over the past year, where it hit the very bottom of the property cycle, it now offers a great investment opportunity. Sydney was deemed the second best opportunity, closely followed by Melbourne. In fact, according to RP Data, the red-hot Melbourne market saw an auction clearance rate of 73.7% during the week ending 7 February. Canberra actually recorded the hightest acution clearance rate at 84.6%, albeit at a much lower volume of just 39 properties compared to Melbourne's 217.

With Brisbane's strong anticipated population growth, the rental market is expected to tighten and experience its first real price growth in the last couple of years, enticing investros back into the market. And, as anticipated, it's investors who have been moving back into the market now that the First Home Owners Grant has been reduced and first time buyers are no longer dominating the lower end of the market.

During December, investor loans rose by 1.1% (up $68 million) compared to the previous month alone. This follows an increase of 1.2% in November according to the Australian Bureau of Statistics. Commitments to buy properties to rent or resell rose 0.9% while construction of dwellings to rent or resell climbed by 2.6%. The value of investment housing commitments seasonally adjusted rose by 1.9% in December. And remember, these figures are from a period prior to the full rollback of the Boost to the First Homeowners Grant on 31 December 2009, so it can be expected that the investment figures for 2010 will be even stronger.

"The pick-up in investment loans is encouraging", said Craig James, chief economist with CommSec. "Overall investment loans have posted modest gains for the past three months and are now up 17% on a year ago".

The average home loan across Australia jumped 9.8% to $283,000 compared to a year ago, reflecting the staggering growth recorded over the past 12 months.

- Paul Davies, Managing Director

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