Mul­ti­ple-home in­vestors shrug off loan curbs

The Weekend Australian - - BUSINESS - TURI CON­DON

The num­ber of in­vestors who own mul­ti­ple prop­er­ties has been out­pac­ing more mod­est prop­erty in­vest­ment, with those who own five prop­er­ties grow­ing by 7.5 per cent in a sin­gle year, ac­cord­ing to the Re­serve Bank.

In its Fi­nan­cial Sta­bil­ity Re­view re­leased yes­ter­day, the RBA high­lighted in­vestor lend­ing is­sues in­clud­ing own­ing mul­ti­ple prop­er­ties and the rise of older in­vestors, par­tic­u­larly over 60s, as adding risk to the bank­ing sys­tem and the broader econ­omy.

In­vestor ac­tiv­ity had been eas­ing af­ter a crack­down by the bank­ing reg­u­la­tor, although Aus­tralian Bu­reau of Sta­tis­tics fig­ures re­leased this week showed a re­bound in in­vestor lend­ing for Au­gust.

Af­ter analysing Aus­tralian Tax­a­tion Of­fice data, the RBA found 70 per cent of in­vestors owned just one prop­erty, 20 per cent owned two prop­er­ties and 10 per cent owned three or more.

Half of all in­vest­ment prop­er­ties were owned by those with mul­ti­ple prop­er­ties and mul­ti­ple own­er­ship has been out­pac­ing in­vest­ment in a sin­gle prop­erty.

The num­ber of in­vestors who owned five prop­er­ties rose 7.5 per cent between 2013-14 and 2014-15, com­pared with an av­er­age growth of 4.5 per cent over the pre­vi­ous nine years, the bank found.

“Given the strong growth in in- vestor hous­ing credit and riskier types of bor­row­ing over this pe­riod, in­vestors with mul­ti­ple prop­er­ties likely con­trib­uted to higher risk,” the RBA said.

The bank also noted that over the 10 years to 2014-15, the pro­por­tion of in­vestors 60 years or older al­most dou­bled.

The bank noted that in­tere­stonly loans favoured by in­vestors were more risky if hous­ing prices fell, as the loan could end up be­ing more than the value of the prop­erty.

While th­ese and other fac­tors could in­crease risk in the sys­tem, in­vestors tended to have lower loan-to-value ra­tios, low­er­ing the exposure of lenders, the RBA noted.

The RBA Sta­bil­ity Re­view comes as econ­o­mists con­tinue to fore­cast eas­ing house prices af­ter a five-year bull run in Syd­ney and Mel­bourne.

Na­tional Aus­tralia Bank has re­vised its house price fore­casts, yes­ter­day pre­dict­ing an in­crease of 3.4 per cent na­tion­ally in 2018, down from 4.3 per cent, with prices slow­ing fur­ther to a 2.5 per cent rise in 2019.

Syd­ney’s run­away house prices would slow to 5.1 per cent growth this year and 3.7 per cent in 2018, while Mel­bourne would see an 8.6 per cent price rise this year and 5.5 per cent next year, the bank fore­cast.

NAB chief econ­o­mist Alan Oster said de­te­ri­o­rat­ing af­ford­abil­ity, the ris­ing sup­ply of apart­ments, tighter credit con­di­tions and ris­ing in­ter­est rates in the sec­ond half of 2018 would dampen the mar­ket.

“But still rel­a­tively low mort­gage rates, a favourable hous­ing sup­ply-de­mand bal­ance and strong pop­u­la­tion growth should con­tinue to pro­vide sup­port for prices go­ing for­ward,” Mr Oster said.

ABS fig­ures show an in­vestor re­bound in Au­gust

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