Each week we receive updated data from our household surveys. One element in the survey looks at investor appetite – specifically whether households are intending to transact within the next 12 months. It is a leading indicator of future investment loan volumes.
However, in the past three weeks we have seen a change in intention. It has started to fall quite significantly (and actually represents the biggest move in the 10 years of the survey).
The chart plots the average intentions each week against the volume of new investor loans written each month. We see a significant downward movement in intention. This is being driven by a range of factors including concerns about future property values, falling rental returns, rising investment interest rates and most recently concerns about potential changes to the generous tax breaks which currently are enjoyed by property investors.
It is early days but it does appear investor property purchase intentions are on the turn. If this is the case, then auction clearances, investor lending momentum and property price rises may be be impacted. We will watch the next few weeks’ data with interest.