Lending to owner-occupiers is growing by 7% annually according to the latest data released in late November by the Reserve Bank of Australia.

At the same time, investor finance is growing by 0.4% due to the tighter lending conditions imposed on investors by the banks. “These results demonstrate that it’s not all doom and gloom in real estate,” notes Tim Brown, Consultant, Our Broker. “Lower investor finance growth is attributable to factors such as fewer foreign buyers. In some cases foreign buyers cannot access credit, are being forced to pay more for finance from Australian lenders and are charged more stamp duty than local investors.

“Foreign buyers are responding with their feet and are taking their money to real estate markets in Canada and New Zealand.”

Fewer investors has cleared the way for owner-occupiers to fill the breach. Tim explains, “The spike in owner-occupiers means there are more first home buyers discovering that rather than competing with 5-6 others for a property, there might be only a single buyer or bidder at an auction.

“First home buyers have bided their time and have saved significant deposits for a first home.”

Interestingly, first home buyers are looking at more affordable houses in outer-ring suburbs and regional cities, as well as apartment markets in inner ring suburbs. “It’s easy to forget that it is still possible to pay around $700,000 for two-bedroom apartment in a fashionable inner ring suburb such as Dulwich Hill, which is just 20 minutes by train to the Sydney CBD,” reminds Tim. “For a young couple earning a good income, this is not a bridge too far financially to buy into a quality, well-located first-home.”

The smarter money has recognised now is an excellent time to buy, and this is contributing to a spike in owner-occupier numbers, notes Tim. “There are also still many investors fearful of the Federal ALP’s plans to abolish negative gearing for established properties. While any investment property purchased before a change of government will be grandfathered under the existing negative gearing rules, savvy investors are extremely worried change is imminent and are buying up quality, well-located properties that offer the prospects of excellent long-term growth and income yield. This activity is underpinning investor lending.”