- by Ed Chan
- in Home Ownership Affordability Property Investment Property Market Updates Wealth Creation
The housing market is recovering — and it’s no thanks to investors. Owner occupier buyers are driving the housing market today, according to the latest data.
According to CoreLogic, property investors have historically always outweighed non-investors. But not anymore, their latest data shows. For the first time, non-investors are dominating the housing market and if the trajectory of housing prices continues, this might be the fastest recovery in history yet.
It is estimated that by April of this year, property prices will overtake its previous all-time high. Assuming the trajectory continues, what would normally take, on average, 11.7 months based on previous cycles, would only take 10 months from the time dwelling values bottomed out in June last year.
To take this into perspective, note that most property recovery periods match the length of time it takes to go from peak to trough. If you look at the table below, you’ll see that the time it takes for the housing market to bottom out is typically long. For instance, last year it took 20 months to get from peak to trough. This year, however, the market recovery could be half of the length of the decline period.
What’s equally amazing is that this growth is not being driven by property investors. This is good news as this means housing affordability will be relatively steady. Investors on the prowl for property investments generally drive house prices up, making it difficult for non-investors like owner occupier and first home buyers to get into the market.
Owner Occupiers are Driving the Housing Market Growth
Recent housing finance growth data shows that owner occupiers are the biggest movers in this recovery.
In the previous upswing of 2012-2017, the portion of new housing finance to owner occupier buyers has averaged 59.4% based on the value of commitments. In the last 7 months, that figure has risen to 71.4%.
Check out the graph below:
Of course, investor participation may increase over time. The downturn in construction may result in increased housing shortage which will, in turn, drive house rents up and encourage investors to go back to the market.
Still, this trend has improved housing affordability and has allowed first home buyers and non-first home-owner occupier buyers to play a part in the market.
The data also confirms that when investors depart and there is no one to compete with, first home buyers and owner occupiers have a fair chance of getting into the housing market.
This might be the best time to buy your first home or get that second home.
Co-Founder / Non-Executive Chairman
If you can time your purchase right, you’ll surely get the best price.
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