Falling house prices sees new wave of property investors showing market interest

18 February 2019

Property investors have been popping up back out of the woodwork searching for super-cheap bargains before a possible Labor election win and subsequent negative gearing changes.

Real estate agents and brokers say the action is heating up in that popular $800,000 to $1.5 million range.

Melbourne buying agency Morrell and Koren’s director Emma Bloom told Australian Financial Review the falling property prices and possible future tax changes are firing things up for apartments and small houses in inner suburbs.

“Investors are bubbling to the top,” she said.

“They can see that there is some good buying.”

Falls in house prices have hit double figures over the last 12 months, with many forecasters predicting a peak-to-trough decline to end up being around 15 to 20 per cent.

Martin North is from Digital Finance Analytics whose surveys are showing improving attitudes towards property investing.

“There is something going on that is not translating into official figures,” he told AFR.

In response, lenders have been quick to target this new wave of investors with low-priced fixed loans over longer terms between one and five years, and AMP’s Shane Oliver said up to eight lenders have cut their one-to-five-year fixed rates by an average of 16 basis points.

“The decline in fixed mortgage rates reflects falling bond yields because this drives the cost of funding for fixed-rate loans,” he told AFR.

“Over the past 12 months the 10-year bond yield has fallen from around 2.85 per cent to around 2.1 per cent now and shorter maturity bond yields have fallen as well.”


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