With a federal election around the corner, potential changes to negative gearing and capital gains tax concessions could be weighing on investor sentiment

Anyone directly or indirectly associated with housing finance has likely felt the pinch of heightened regulation and tighter credit policies. Mortgage brokers and lenders are the first industry participants that come to mind, however, the slowdown in lending activity has broader implications for a wide range of peripheral industries and revenue streams.

Less lending implies fewer home sales for real estate agents and developers, a reduction in building and pest inspections, less conveyancing for lawyers and a slump in stamp duty revenue for state governments. Generally, when people buy a home, they also splurge on household items such as appliances, white goods and home furnishings, so there is a strong relationship with household consumption. Less spending from households has direct implications for Australia’s economic prosperity, considering consumption comprises close to 60% of our gross domestic product.

CoreLogic Monthly Value of Housing Finance Commitments

The latest data from the Australian Bureau of Statistics shows the overall value of housing finance commitments was down 5.1% between July 2017 and July 2018. Since the peak in the value of housing finance in August last year, the value of commitments has reduced by 7.0%; a reduction of about $2.35 billion.

CoreLogic Monthly Value Of Housing Finance Investors

The decline has been most visible for investment loans where the value of lending is down 15.7% over the twelve months ending July ‘18 and almost 31% lower since peaking in April 2015. Owner occupier lending has held much firmer, actually rising 1.1% over the past twelve months (including refinanced loans) and only 1.0% lower than record highs. Clearly, those industry participants who are more exposed to investment channels have borne the brunt of the credit downturn.

CoreLogic Investors As A Percentage

Investors now comprise only 41% of overall mortgage demand, down from a record high of nearly 55% in May 2015. On average, over the past ten years, investors have comprised approximately 45% of mortgage demand, highlighting that investment concentration has been tracking below the decade average since November last year.

Over a longer period, say the last 30 years, investment levels have averaged much lower, averaging just 37% of the overall value of housing finance; a reminder that the past decade is a high benchmark for investment activity.

The value of investment lending has trended lower across every state and territory over the past year, except Tasmania where the value of investment lending was up 16.3% between July 2017 and July 2018.

Despite the trend towards less investment, the states where investment has been the most concentrated, New South Wales and Victoria, continue to show the highest share of investment lending based on value. Investors still comprise almost 49% of lending in New South Wales and almost 41% in Victoria, well above the long term average. Considering the short to medium term prospects for capital gains in these states is relatively low and rental yields remain close to the record lows, the concentration of investment activity in these states doesn’t make much sense.

In all likelihood, we will continue to see investment activity trending lower, especially in New South Wales and Victoria due to mortgage rate premiums for investors, tighter lending criteria, low rental yields and soft prospects for capital gains. Additionally, with a federal election around the corner, potential changes to negative gearing and capital gains tax concessions could be weighing on investor sentiment.

CoreLogic State By State
The last month of winter saw the housing market correction deepen, with dwelling values falling across five of Australia’s eight capital cities. CoreLogic’s national index was down three-tenths of a per cent over the month taking the cumulative decline since values peaked in September last year to 2.2%..https://youtu.be/C0MRUPcSXl4

About ljgrealestate 据联大

Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
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