April 19, 2021 by Dymphna

Who is really driving this boom?

There’s a frenzy in first home buyers, but the baton might finally be heading over to investors…

Who’s running this boom anyway?

Is it investors? Is it those naughty investors gobbling up all the good properties again?

Nup. Not yet at least.

That’s what Nicole Pedersen-McKinnon over at Yahoo Finance is saying. In fact, there’s a bit of a first home buyer stampede going on, with many young buyers rushing their first purchase:

‘Panic-it’s-a-pandemic’ interest rates and rampaging property prices are persuading tens of thousands of first home buyers into the market before they’ve saved the deposit they want.

Now, normally I’d say that the time to buy is when you’re ready not when you’re rushed.

But with the average prediction of 39 experts and economists putting property price increases at 12 percent over the next two years, perhaps that doesn’t hold true in these extraordinary economic times.

Yeah, probably fair enough. Be urgent, but not rushed. I’d be getting in now if you can, but it’s always worth being meticulous with any deal, and your first home is no exception.

But rushing they are:

More than half of aspiring first-time buyers are jumping on the ladder earlier than they had planned.

Finder’s first home buyers report, a survey of more than 1000 home buyers, found 53 percent are bringing forward buying, while only 35 percent said they were already planning to buy their first home at this time. Twelve percent were unsure.

And this is certainly reflected in the data. Loans to first home buyers are up an enormous 62 percent year-on-year.

Apparently, according to Finder’s research, men are more influenced by the emergency interest rate setting than are women – 60 percent versus 47 percent.

We’ve seen this in other studies too. Women typically outperform men in investing by about 2% p.a – why? Because they’re meticulous.

You go ladies.

Speaking of ladies and finance, I’ve been enjoying Karen Maley at the AFR lately. Back when I started, female finance reporters were thin on the ground.

But Karen’s got the inside running with the banking sector. And the word in the board rooms is that investors are about to storm back in to the market.

The country’s house price party is likely to heat up even further, with bankers reporting that property investors – who have long sat on the side-lines – are finally beginning to join in the festivities.

Until now, the boom in house prices has been a very patchy affair. There’s been a huge run-up in the prices of suburban houses – the preferred abode of owner-occupiers, who have taken advantage of ultra-low borrowing costs to upgrade their dwellings.

But the prices for inner city apartments, which tend to be favoured by investors, have languished.

And this has created a very unusual, two-speed house price boom. As one senior banker noted: “The market is hot in some places, and cold in others. In particular, inner city apartments aren’t going well at all.”

… but Senior bankers report property investors have shown a renewed appetite for borrowing in the past month, after shunning the market for at least a year.

Bankers said the pick-up in investor demand for loans had only become evident in the past month or so and was unlikely to be reflected in official figures as yet.

But they noted they were detecting a discernible shift in investor sentiment towards the property market.

One factor buoying investor confidence is rental yields have stabilised, which means that investors no longer need to worry that they could be sitting on a hefty capital loss from their investment property.

I’d believe that. It’s what I’m seeing on the ground too.

I mean, as an investor, you can’t look at an outlook for property prices like this, you can’t look at rents growing the fastest they have in six years, and just sit it out on the sidelines.


You’re not just going to sit this boom out too right?