Bubble warnings as investors move back to property

Originally Posted by theaustralian.com.au

PROPERTY investors have returned in force to Australia's major capital cities with more than one-third of home loans sourced for investment purposes.

The percentage of loans made through Australia's biggest mortgage broker surged 26 per cent in the past six months as buyers shrugged off the global financial crisis, rising interest rates and warnings of a property bubble.

The AFG Mortgage Index, released yesterday, showed the proportion of loans to investors rose to 34.1 per cent of all mortgages in February, up from 27.1 per cent in August. It was the highest level of investor interest in the four-year history of the index.

AFG has a loan book of almost $60 billion and 2100 member brokers, and claims about 10 per cent of the mortgage market.

Originally Posted by nickmakwell

love that graph - I think we could see another 25% growth in house prices in a short period of time - particularly if the Government increases the grant again or steps into the market again - its not inconceivable and would be the last lurching stages of speculation...

Originally Posted by Matt Hackett

This wouldn't surprise me either. But it would make my stomach turn and really cement a popping rather than deflating scenario.

Originally Posted by Chris Joye

Despite the often misplaced media hyperbole, Australian house prices have only grown by 6.1 per cent per annum over the last five years according to RP Data-Rismark's Capital Cities Dwelling Price Index. What the media never tells us is that disposable household incomes rose by a much greater 7.9 per cent per annum over exactly this same period. The Governor of the RBA has made this point in speeches of late. Even accounting for the 2009 recovery, Australian house price growth has materially underperformed incomes.

An inconvenient truth.