Investment property loans grow

Investment property loans grow

Posted on Wednesday, May 21 2014 at 8:36 AM

Over the past four years the number of investment property loans in Australia has grown by 37 per cent compared to an increase of only 4 per cent in the number of owner-occupied loans.

These are the latest findings
from the Roy Morgan Research Consumer Single Source survey of about 50,000 people per annum. In 2010, just
under one million Australians aged over 18 had an investment property loan
compared to an estimated 1.31 million as at March this year – an increase of 37
per cent. Over the same period, the number of Australians with an
owner-occupied home loan increased from 4.66 million to 4.83 million, an
increase of only four per cent. 

According to the survey, the growth in investment property
loans has come predominantly from the 35 to 64 age group, which accounts for 78
per cent of the increase. About 12 per cent of the 50 to 64 age group now hold
an investment property loan (compared to 9.4 per cent in 2010), and 11.3 per
cent of the 35 to 49 age group had one (up from 8.5 per cent).  

Within the same time period, the proportion of those aged
50 and over with an owner-occupied home loan also increased, with the greatest
growth in the 50 to 64 age group, up from 31.6 per cent to 34 per cent.

“Going forward, government
policy and the economic climate will play a major role in whether people choose
to invest in the property market or take out a home loan. Older Australians
will face the prospect of cuts to pensions, and with the proposal for the
pension age being increased to 70, this could impact the investment property
market,” Norman Morris, Roy Morgan
Research industry communications director, says.

“Younger Australians may
continue to find it difficult to enter the property market, either for
investment or owner-occupied, because for both types they’re competing with
more cashed-up older property buyers. 

“The future of negative
gearing, increased property investment by self-managed super funds and interest
rates are some of the factors likely to play an important role in the
attractiveness of borrowing for investment property in the future.” 

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