There are signs that the worst may be over for the property market with new data showing marked improvement in investor activity in the month of July.
The latest data from the Australian Bureau of Statistics (ABS) showed investment loans rising by 2.3%, thanks to the rise in the construction of dwellings for rent or resale (up $165m, 28.2%) and the purchase of dwellings by others for rent or resale (up $85m, 12.4%).
While the number of loans for owner–occupier loans fell 0.1%, the proportion of first homebuyers hit a nine–month high of 18.6%.
Craig James, chief economist with CommSec, said that property investors waded into the property markets in July more confident that interest rates have peaked.
“A combination of rising rents, solid population growth and falling interest rates will cause more investors to tender sale contracts to their lenders in coming months,” James said.
“We expect the RBA to hold off until November before cutting rates again. The economy is soft but the situation is hardly dire. Housing lending will gradually improve over coming months with investors expected to lead the way,” added James.
ABS also reported significant improvements in retail spending and business conditions in the same period.