Property investment fades, but…

The attraction of investment property has faded.

Australians borrowed more than $5.5 billion, in July last year, to buy properties they intended to resell or rent.

By July this year, though, the amount borrowed for the same purposes, was only slightly above $4 billion.

These developments show up in figures just released by the Australian Bureau of Statistics.

At first sight, they might seem odd.

Australia, after all, is still experiencing quite strong population growth.

That is coming both from natural increase and  migration.

So investment properties should command high returns.

Interest rates, though, have been unusually high.

And investment accounts, with Australian banks, have also been very tempting, for the investor.

Many investors have clearly seen parking their money there as a rational response to the difficult conditions that presently prevail.
There have been uncertainties, in Australia’s property markets, too.

With that strong population growth, though,  property markets are likely to recover quickly.

Especially as interest rates are now, clearly, on a downward path.

But finance for investment properties hasn’t just been expensive, in recent months.

It has also been scarce, too.

Shaken by the US credit crunch,  Australia’s bank managers have become very selective, when new investment proposals come over their desks.

Especially with property.
That, almost certainly, has contributed to the downturn in property investment in Australia over the past year, as well.