Lower interest rates and the possible change to negative gearing are powering Canberra residential investor activity.

Over June, the value of approved residential loans to investors hit $213.9 million, according to the Australian Bureau of Statistics. The June figure registered an increase of 14.4 per cent from the previous month, although it trailed the $224.1 million recorded in the same period last year.

However, the value of residential lending approved in Canberra is still down by 17.1 per cent in the first half of this year compared with what has been recorded in the first six months of 2015.

Increased residential investor activity in most state markets came soon after the rate cuts last May and the recent proposal by the Australian Labor Party in its federal election campaign to shift tax treatment for residential investment property to negative gearing.

This momentum of residential investment is expected to continue throughout the year just as another rate cut was announced this month, along with changes to superannuation policies.

The annual monthly growth rates over the second half of 2016 are also expected to go above the figure set by financial regulators. This would run counter to what happened last year when higher mortgage interest rates imposed on investors resulted in the pronounced decline in loans for the second half of 2015. Financial regulators were then concerned about strong lending to investors so interest rates were subsequently increased.
 

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