I should've made a new financial year resolution not to read any more property market commentary.
The best thing you can probably do if you're interested in property investment is to learn how to read economic and property market data for yourself.
Then you don't need to read the reams of awful market commentary which is loaded with vested interest and hyperbole at every turn, because we certainly have that in Australia in spades.
Otherwise, you might risk never buying any property at all (years and years of never-ending spruik about an inevitable armageddon), buying investment property in a mining town at the very zenith of the resources construction boom (strong yields though, apparently) or investing in a city or regional town where the economy is floundering miserably.
Investor activity moves higher
The ABS released its Lending Finance data today, which showed the value of investor loans increasing in New South Wales, Victoria, Queensland, Western Australia, South Australia, the Northern Territory and Tasmania.
The value of investor loans fell very marginally in the Australian Capital Territory, which is not a surprise given the weak state of the employment and property markets, covered here previously.
In the event, all of the major states showed a strong pick-up in investor loans in May.
Note that this series charted below is not seasonally adjusted so the increases in investor loans are very significant and reflect that low interest rates are continuing to drag more investors into the market.
Even South Australia, where the unemployment rate has hit 7.4%, saw an increase in the level of investor loans for the month, albeit this only took the value of loans in the state back to where it was 12 months ago in May 2013.
On a rolling annual basis, the value of investor loans remains in a strong uptrend everywhere except South Australia, where investor loans are still below where they were in Q1 2010 before the easing cycle began later that calendar year (click chart):
As for New South Wales (read: Sydney), I don't even know where to start.
If hyperbole is what you want, then how's this for a stat:
The May 2014 investment loans figure was by far and away the highest figure ever recorded for investment loans by any state at any time in Australian history, easily eclipsing the record set in November 2013 (recorded in that month by New South Wales again) by more than 12%.
You can perm almost any stat you like on a rolling annual basis: NSW investor loans have increased by 3% m/m, 9% q/q and a whopping 42% y/y.
Over the last two years, the rolling annual value of investor loans in New South Wales has increased by nearly 80% (click chart):
Part of the reasoning behind this, no doubt, is that the proportionate fall in owner occupier financing is accounted for by unprecedented levels of investor activity.
It's a structural shift which has been underway for some time in the major capital cities, with far many more Australians electing to rent and invest (or in some cases own and invest) than ever before.
Mortgage demand in June does seem set to be a little less frantic than that seen in May.
That said, it's only a couple of months now until the warmer months start rolling around...which is when buyer activity traditionally starts to heat up again.
And, for all the talk about the market now peaking, interest rates still seem more likely than not to fall further, which would only see yet more investors and homebuyers entering the market, one would assume.