A Property blog by Paul Bennion.
Despite moves by APRA to cool the property investment market, lending to property investors throughout Australia jumped by over $1 billion to $11.58 billion for the year ending July 2015.
It is also significant that lending to property investors exceeded loans to owner occupiers during July 2015 by over $800 million.
These figures confirm that investor confidence in the Australian property market still remains high especially in New South Wales and Victoria.
Buyers in these two States are not being deterred by rising property prices with the average home loan in New South Wales rising by $50,000 to $395,000 during the past year.
Very low interest rates and the growing uncertainty about the world economy are encouraging more people to invest in property.
This global financial uncertainty is already having a negative impact on our stock market which in turn should encourage even more people to invest in property during the coming financial year.
However, this rising activity by investors has a flip side because the increasing number of rental properties being made available by investors is having placing a downward pressure on weekly rents in some capital city markets.
It is therefore no surprise that the latest CoreLogic research reveals that rents are increasing at their lowest rate on record.
The CoreLogic figures show that during August 2015, Capital city rents had increased by their slowest annual rate of growth ever recorded at just 0.7%.
In addition, rental yields for all Capital cities also bottomed at just 3.5% with Sydney and Melbourne new recording record rental yields.
Many first time investors do not fully appreciate the fact that rental yields are now low and that rents are rising at a very slow rate.
Another common mistakes that first time investors make, is not to claim their full tax depreciation benefits associated with owning an investment property.
Many of these first time property investors fail to understand that the tax benefits from depreciation can be just as important as rental income and that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property.
A large proportion of these tax benefits are never claimed which means that each year hundreds of millions of dollars in tax benefits are lost by investors not claiming their legitimate entitlements.
Property investors can fully maximize these depreciation benefits by obtaining a depreciation report of their investment property from a member of The Australian Institute of Quantity Surveyors (AIQS).