Queensland investors recovering as first home buyers surge

As home investor activity in Queensland continues to recover, the state is now recording nation-leading increases in first home buyers.

Latest ABS data reports that the value of loans approved to residential investors in Queensland increased sharply by 22.7 per cent over May compared to the previous month to a total of $1.66b.

Although investor lending increased over the month, the value approved over the first five months of this year remains 1.4 per cent lower than that recorded over the same period last year. The full year to date comparisons however reveal that the underlying growth trend is improving with a decline of 3.9 per cent compared to the 5.9 per cent fall recorded over the year ending April compared to the previous year.

Although annual growth in Queensland home investors is still lower than the year before, first home buyer activity continues to rise. 9118 first home buyer loans have been approved over the first five months of this year which is an increase of 8.6 per cent or a rise of 720 compared to the 8398 approved over the same period last year. This was clearly the best result recorded by any of the states.

The average first home buyer loan approved in Queensland over May decreased marginally by 1.1 per cent to $295,000 over the month but was 2.6 per cent higher than that recorded over May last year.

Although residential investor activity has increased recently, higher interest rates and tighter lending conditions as initiated by financial regulators will act to constrain growth in this market sector.

The extension of the Queensland first home buyers grant boost to the end of this year will however act to continue to support growth in this already robust market sector

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.