Aussie property investors still on struggle street

According to The Australian, one-third of investor mortgages still deferred amid falling rental markets:

Smaller banks are bearing the biggest burden from deferred investor loans, with Regional Australia Bank struggling with 86 of its investor loans in forbearance, according to APRA data.

Even Westpac, NAB and CBA are among the 10 worst affected banks. Deferred investor loans at CBA have grown slightly over the course of the pandemic and are locked at 34 per cent…

Rental markets have faced plummeting demand, as demand from international students has dried up.

The Reserve Bank’s September bulletin noted the hit to rents had been so huge it had driven the first quarterly falls in rents in the consumer price index…

Total loans deferred across the banking sector totalled $87.6bn in October…

Analysts warn of a tale of two housing markets in 2021, with world-leading price rises in Australia coupled with an increase in mortgage defaults.

Apartment investors across Sydney and Melbourne are most exposed given the huge lift in vacancies:

Alongside plummeting rents:

The Sydney / Melbourne apartment rents situation is unlikely to turn until immigration is rebooted.

The risk to the broader property market is muted, however, with this cycle being driven by insatiable owner-occupier demand rather than demand from investors:

Unconventional Economist
Latest posts by Unconventional Economist (see all)

Comments

    • Only took 5% of the market to default in u.s. in gfc from beginning to end of the crash. 34% of 9% is 3% already. That tiny number is bigger than it seems.