Is ‘rentvesting’ causing loan sizes to spiral upwards?
Amid a dwindling supply of rental properties, the “rentvesting” efforts of buyers and investors are having profound effects on loan size and volume.
According to the Real Estate Institute of Australia (REIA), a sudden rise in house prices alongside a decline in rental stock has driven an increase in the value of new housing loans.
Reflecting upon these findings, which were drawn from the Australian Bureau of Statistics (ABS) data, REIA president Leanne Pilkington said: “We’re witnessing an increase in rentvesting, particularly in regional areas, where individuals choose to rent a property to reside in while simultaneously investing in real estate elsewhere, reflecting changing preferences and economic dynamics in the housing market.”
This notion was reflected in the ABS findings that the value of new housing loans has risen 17.9 per cent since March 2023 to $27.6 billion, with a 3.1 per cent rise in the month of March 2024 alone.
Within these statistics, owner-occupier loans increased 2.1 per cent in March 2024 to a new value of $12.3 billion, having increased 8.8 per cent since March 2023.
First home buyer loans were also observed to have risen 4.4 per cent in March 2024 to be valued at $5.2 billion, a 17.9 per cent rise since March 2023.
The value of investor loans was found to have increased the most year-on-year, jumping 31.1 per cent since March 2023 to its present valuation of $10.2 billion.
In deconstructing these findings, the ABS noted that the value of these new loan commitments is a direct result of both the size and quantity of loans being approved.
The government agency also raised that these findings align with the historically low vacancy rates observed throughout the last year.
Nevertheless, Pilkington remarked that housing affordability still continues to pose challenges, expressing that “the data does not fully reflect the market dynamics”.