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Property investments in Australia on the decline
The number of residential property investment loans
in Australia has fallen as investors have opted out
of the country's softening housing market.
The value of investment housing commitments during
the month of July decreased 5.6% according to the Australian
Bureau of Statistics.
The number of loans for the purchase of new homes fell
1.4%, while loans for the construction of new homes
dropped 3.4% and the number of loans for the purchase
of existing homes rose 0.6%
"The correction in the level of investment loans
is now 30% off its peak in mid 2003," said Paul
Brennan, Managing Director, Citigroup.
"We expect this correction to go further given
the current weakness in house prices in Sydney and Melbourne.
"In contrast, lending to owner occupiers remains
at high levels reflecting stable interest rates and
the robust economic backdrop, including low unemployment,"
Mr Brennan said.
JPMorgan economist Jarrod Kerr said the numbers indicated
investors no longer thought residential housing held
value. He said: "Australia's housing market is
overvalued, and punters are reassessing the attractiveness
of the market."
JPMorgan estimates Australian house prices are 23%
overvalued, with New South Wales being the least attractive
with an estimated 36% overvaluation.
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