Australia is to see a property surge in the new year, according to experts, who have warned that first-time buyers could struggle to get into the market. Interest rates will hit a near record-low, consequently encouraging investors to put their capital into the residential property market even more so than they did in the past year. The Australian reports that a number of analysts predict these yield-seeking buyers will account for over 40 per cent of home loans in the country.
Typically investors account for between 20 per cent and 30 per cent of home loans, but this figure is predicted to rocket in the next year. According to experts, they can expect low interest rates to continue in 2014 due to the dollar still being relatively high and the prospect of increased unemployment.
The Australian Bureau of Statistics recorded 7.6 per cent of national house-price growth to September in 2013, and impressive figures like this will only serve to drive up investor interest.Sydney saw the most impressive performance in the increase of home loans during this time, with boom levels of 11.4 per cent. Meanwhile, Perth saw an 8.6 per cent rise, Melbourne enjoyed 6.8 per cent growth and Brisbane exhibited an increase of 4.1 per cent.
BIS Shrapnel managing director Robert Mellor commented that the low interest rate environment favoured investors due to the fact they were more likely to have the cash up front to afford the initial loan deposit, and then take advantage of high rental yields. He added: “For a first-home buyer, the deposit hurdle has become significantly worse in the last couple of years because the government has taken away the (first-home buyer) grant and the stamp duty benefit in some states and so, in relative terms, the first-home buyer has suffered compared to an investor.”