This Leanyer home sold for $840,000 in October. Picture: realestate.com.au
Investor activity has surged to new heights in the Northern Territory with new analysis revealing investors now make up almost half of all home loan lending in the Territory.
The PropTrack Terri Scheer Investor Report released today showed investors accounted for 44 per cent of home loan lending in the NT, the highest share on record.
REA Group senior economist and report co-author Angus Moore said the key drivers behind this investor activity were likely falling mortgage rates and tight rental market conditions.
The report showed Darwin’s rental yield sat at 6.4 per cent in September while the median home price increased 11.4 per cent year-on-year in the same month to a new peak of $558,000.
Adam Cullen, owner and operator of Mortgage Choice Darwin City, said as Darwin home prices and rents continued to lift, he was seeing both owner occupiers and investors keen to buy.
“There are owners who are leveraging equity in their properties to create investment portfolios or to get a new home,” he said.
“But there is a lot of interest from first homebuyers and others looking to build (off the back of government grants).
“There are loan applications going through right now that aren’t necessarily settling yet as they wait for land to be released, and those may not be coming through it the statistics.”
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This Alawa home sold for $895,000 in October. Picture: Supplied
Mr Cullen said the increased activity in the Darwin market was driven by interstate investors combined with government grants on offer.
“We’ve seen strong growth figures in recent months and we’re seeing properties turn over in a short time, with some not making it to market at all,” he said.
“It has been very busy for people coming to make enquiries on loans, then people see all the activity and that spurs them on to also take action.”
Mr Cullen said from his experience, Darwin investors were buying in a range of locations.
“Some are seeing the growth that has happened in the NT and believe there is more to run,” he said.
“Some feel they need to diversify and buy in a new location, reduce their risk and target where there may be future growth.”
Mr Moore said nationally, the number of new investor loans had risen solidly in the past two years, after a quieter period when the RBA started raising rates.
“Rental market conditions remain very tight, and rents have grown rapidly in recent years.
“That’s likely encouraging investors to buy in.
“With markets expecting at least one further rate cut by the Reserve Bank and challenging rental market conditions persisting, strong investor activity is likely to continue over the rest of this year and next.”
REA Group senior economist, Angus Moore. Picture: Supplied
Terri Scheer executive manager, Carolyn Parrella said more than 90 per cent of investment properties were selling for more than their purchase price, which was around the highest share on record.
“The current market conditions could present a lucrative opportunity for property investors,” she said.
Mr Moore said investors were now making up around their highest share of lending since 2017, at 38 per cent.
“But this is a fairly modern feature,” he said.
“If we wind back 50 years, in the late 1970s, just one in 25 tax filers reported rental income. “By 2022/23 – the most recent data we have available – that figure has more than tripled to just over 14 per cent.”
Mr Moor said most investors were not large-scale landlords.
“Around two-thirds own just one investment property, about one in five own two, and only 4 per cent hold more than four,” he said.
“Investors with large portfolios — owning six or more properties — are just 1 per cent of the group – though they account for a higher share of the properties owned.”
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