A General blog by Paul Bennion.
The latest ABS figures on home lending confirm that property investors are now leading the charge in terms of borrowing to purchase property throughout Australia.
During April 2014, property investors secured fixed loans totalling $10.9 billion or an increase of 2.3% over the past year.
“In comparison, lending to borrowers seeking to buy owner occupier homes rose by 1.4% during the past year. Overall, investment loans account for around 40% of all housing finance in Australia
There has been a dramatic lift in a activity by property investors over the last year compared to the post GFC period when in some capital cities of Australia property investors accounted for less than 10% of all lending.
Record low interest rates are driving the strong demand for investor home loans in Australia over the past year.
This trend is likely to increase with the international borrowing costs for Australian banks easing over recent months.
The decision by the European Central Bank to reduce interest rates into negative territory, for example, is resulting in a flight of lending capital to countries such as Australia where interest rates are relatively high by international standards.
This is very significant for the Australian property market because it means that local property owners could soon enjoy even lower interest rates. This is because banks in Australia need to raise around $100 billion from the wholesale market every year of which around half is sourced from off short.
With the capacity of Australian banks to now access lower cost funds from abroad combined with greater competition to gain a larger market share of home loan market, it is very likely the retail interest rates could fall even further during the coming year which is good news for property investors in Australia.
While investors can look forward to even lower interest rates, they should also seek to maximize their tax depreciation benefits through investing in property as lower interest rates may mean that negative gearing benefits could be reduced
To qualify for this generous tax deprecation benefits, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.
Property investors should check that the company undertaking their tax depreciation schedule is a member of the The Australian Institute of Quantity Surveyors (AIQS).
Employing a company who is a member of AIQS such as DEPPRO gives protection to consumers that their tax depreciation report complies is completed in a professional manner.
