Investment lending surge
The Bank of Canada cut interest rates this week, and is expected to continue cutting interest rates throughout the remainder of 2024.
The European Central Bank also cut interest rates today, and is expected to deliver another 36 basis points in 2024, according to financial markets.
In the US, the Federal Reserve is expected to start cutting by around September.
Australia stayed locked down for longer with closed borders, so we may be tracking 6 months behind other developed economies...but this is probably where we are heading next year.
Property investors return
In that context, investors are seemingly responding to the housing and rentals shortage.
The ABS reported that lending for housing surged 5 per cent in April, to be 25 per cent higher than a year earlier.
Source: ABS
Owner-occupier lending saw a strong increase in the month, while investor lending is up 36 per cent over the year, with big increases in New South Wales, Queensland, South Australia...and especially Western Australia.
James Foster with the outstanding graphic:
Source: James Foster
At the same time, many investors are selling up due to cashflow pressures, especially in Victoria.
Ben Kingsley from PICA and Empower Wealth notes:
I can't vouch for whether the latest monthly numbers provided by Ben below are fully complete, but if so, look out...
The rental market in Victoria is likely to come under a great deal of pressure next summer, based on these trends.
Construction lending for housing fell further in April and has plunged -46 per cent lower over the past year, backing up the latest AiG activity index, which showed that activity in the construction sector has been crunched, with industry layoffs now the order of the day.
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