A Finance blog by Paul Bennion.
Rising rental yields and stable interest rates are believed to be attracting investors back to the property market, signifying renewed buyer confidence in the property sector.
Investment home loan figures from the December 2011 quarter show that the total value of loans secured for property investments throughout Australia totalled $22.22 billion. This means, on average, property investors are now borrowing over $6 billion each month either to purchase established homes or construct new properties.
Paul Bennion, Managing Director of tax depreciation specialists, DEPPRO, said this represents an improvement in total borrowing of nearly $1 billion for the last quarter of 2011, compared with the start of the year.
During the first three months of 2011, the total value of borrowings by investors was around $19.29 billion. The latest lending figures of over $20 billion show a strong improvement, particularly for investment lending related to new properties.
According to Bennion, during December 2011, total lending for the construction of new investment homes was $613 million, an increase of $226 million compared to December 2010.
We believe this gradual improvement in lending represents a turning point in the property market with investors gradually gaining greater confidence to purchase property.
If interest rates continue to remain relatively stable, we predict that this improvement will continue during 2012,” Bennion said.
Bennion also urged investment property owners to consider obtaining a depreciation schedule. The tax benefit savings and cash flow benefits investors earn from property depreciation can amount to several thousands of dollars each year, depending on the property.