Why The Smartest Investors Are Back Buying Into The Melbourne Property Market! - By Konrad Bobilak

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Dear Fellow Property investors,
Did you know that Property Investors are swallowing up even more of the housing market?
In Australian politics there are relatively few issues outside of foreign policy that the two major parties can agree on. But there is one issue where both sides ostensibly agree: greater levels of home ownership.
In the run up to the last federal election, then Opposition Leader Anthony Albanese promised that a Labor government would help people achieve the “great Australian dream of home ownership”.
“For too long Australians who have worked hard have been locked out of the housing market by flat wages and rising prices, unable to even get a foot in the door let alone a roof over their heads,” Albanese said
Opposition leader Peter Dutton shared similar views on home ownership with the press late last year: “the best way to empower Australians - to make them masters of their fate - is through home ownership.”
The leaders of the major parties sharing this view on home ownership is nothing new. Over 70 years ago there were debates in federal parliament not too dissimilar from todays, in which the leaders of the Coalition and Labor made their case on which party would do a better job building more new homes and getting more Australians into homes of their own.
Rhetoric collides with reality
The peak rate of home ownership was recorded 57 years ago as part of the 1966 census, at which time 73 per cent of households owned homes. More recently, the Australian Institute Of Health and Welfare (AIHW) recorded a home ownership rate of 71.4 per cent in 1995. As of the latest data from the 2021 census, the home ownership rate has dropped to 66 per cent.
This raises an uncomfortable question for the nation’s leaders. After spending more than $20.5 billion on grants, concessions and other cash grants to first home buyers in the decade to 2021, home ownership rates have not risen, but instead have continued to decline.
Solely based on the decline in the proportion of households who own homes, there around 560,000 households who are renting today who would have otherwise been homeowners if the home ownership rate remained as it was in 1995.
Rise and rise
Despite rising levels of home ownership being the stated priority of both the major parties their policies have achieved the polar opposite. The AIHW data instead illustrates a very different trend: the rise of the property investor.
In 1995, 18.4 per cent of households rented from a private landlord. As of 2020, 26.2 per cent rented from a private landlord and this is arguably somewhat distorted lower by the snapshot being taken during the pandemic.
If we extrapolate that on to the current number of households as determined by the ABS, private landlords have roughly 810,000 more tenant households today than they would have if the ratio of private landlord held housing to overall housing stock remained the same as 1995.
Today’s market
According to data from the ABS, over the last 12 months 33.4 per cent of new mortgages for existing properties have flowed to property investors. In terms of new mortgages overall including construction loans and brand-new properties, that figure rises to 34.3 per cent.
By dollar value the proportion of mortgage lending flowing to investors recently hit the highest level since 2017, hitting a share of 36.2 per cent of all new housing finance.
With investors holding 26.2 per cent of occupied housing stock, this level of activity implies a growing proportion of the nation’s housing stock once more flowing to investors, unless otherwise offset by a much greater proportion of owner occupiers making fully cash purchases or investors selling out of the market at a greater rate than they are buying in.