Banks Incentive For Investors

It’s quite unusual to see major lenders doing something proactive to encourage investors.

Generally the big banks, along with all levels of government, treat property investors as cash
cows, with higher charges for everything compared with what home buyers are charged.

That includes higher interest rates, higher insurance rates, higher council rates, higher rates of
stamp duty - plus taxes that home owners don’t have to pay, like land tax and capital gains
tax.

There’s no justification for any of that, other than the reality that investors are a minority and
it’s politically more palatable to slug them and not home-owners.

But right now it appears that the big banks believe property investors deserve some
encouragement.

Evidently, they believe investors will be returning to the residential market in large numbers
because rising immigration will lead an extended rent squeeze.

The 2023 net immigration number is the equivalent of a city the size of Newcastle being
added to the population, with major impact on housing supply – at a time when the national
average rental vacancy rate is around 1% and considerably lower in many parts of the nation
– and building approvals are falling when we need them to be rising.

Commonwealth Bank, the nation‘s biggest lender, has now announced it will allow investors
to borrow up to 95% of property’s value. The bank’s previous maximum was 90%.

That means investors can get a loan to buy a property with less of a deposit.

At the same time, another big four bank, NAB, has upgraded its forecasts on the outlook for
residential property this calendar year to 8% nationwide, after another upgrade earlier in the
year had suggested 5% - and not forgetting that at the start of the year they forecast house
prices would fall 15% or more in 2023.

Across Australia, residential property prices have been rising, month by month, for all the
2023 calendar year.

In addition, rental income has been showing double-digit growth - but investors have largely
remained on the sidelines, having been massively discouraged by a range of policies at all
three levels of government.

NAB’s figures suggest the number of investors buying in the market has turned the corner
with signs of early growth.

It says the market share of “local investors for established houses” has nudged up to 18% but
still remains well below average.

Overall, it appears some of the big banks are seeing better prospects and higher activity ahead
for property investors across Australia.