Hot on the heels of the Australian Bureau of Statistics (ABS) housing finance and lending data for December 2014, CoreLogic RP Data has revealed some fascinating insights into the trajectory of the residential investment market across the country. Investor activity reached near peak levels in the final month of last year, which provides a great incentive for commercial property investment in Surfers Paradise.
The housing investment market continues to strive from strength to strength. Even ahead of the Reserve Bank's cut to the official cash rate in February, the value of investor housing commitments surged. In December 2014 this segment accounted for a staggering $12.6billion – a 6 per cent increase on the previous month and rounding out the 18.8 per cent rise in value over the year.
In fact, investor loans made up 41 per cent of the total value of housing commitments in December. This level is almost on par with the record of 41.2 per cent set in October 2003 – which, it should be noted, was at the very height of Australia's housing boom.
Similarly, investor loans increased 66 per cent since 2012, swelling from $7.6billion to the current high of $12.6billion. Once more investment has hit a high note. This is the largest increase over a two year stretch since December 2003.
Although investors are sinking their teeth into Sydney and Melbourne, the benefits are felt Australia-wide and Queensland still has a strong presence. Investment commitments grew by 8.6 per cent over 2014 in the sunshine state, accounting for 13.1 per cent of the value of all loans in 2014.
This fosters positive investor sentiment all over the state. Keeping an eye on the residential market provides a useful guide for where the commercial market is headed – and how this could affect your own investment activities.
New builds in particular are growing in favour, which confirms the strength of the construction industry across the country. While established properties still make up the bulk of investment loans – $11.5billion – investors are snapping up the limited supply of new builds readily. Over the past year, the value of investor loans for new builds increased by 59.8 per cent while established properties moderated slightly, growing just 16.1.
With the HIA predicting a further 40,000 new homes in 2015, the strength of construction for new houses will provide flow on effects for elsewhere in the market. $1billion in loans were taken out for new houses in December 2014, the highest figures since the same month in 2002 and a strong sign that the construction industry is responding to burgeoning demand.
Harley Dale, Housing Industry Association (HIA) chief economist, said the Australian economy is enjoying the benefits of invigorated construction. This will lend a hand in drawing more people to Australia's shores – something that create more opportunities for investment in Surfers Paradise commercial property.
"Residential construction is the success story of the Australian domestic economy," Mr Dale said in 20 February release.
"National new home building activity is the star of the housing show with a record level of 195,936 new dwelling commencements forecast for 2014/15. That result would represent growth of 7.7 per cent and cap a third year in a row where new home construction has headed higher."
"Imagine how weak the Australian economy would be without new housing and its economic multiplier benefits!"
Residential investment's upward trajectory is an auspicious sign for the future of Queensland's commercial market. If you would like to secure your own piece of commercial property in Surfers Paradise, or if you have any questions about what these trends mean for your portfolio, consult with your local real estate agent.