Peter King: Investors return to residential property
Investors are beginning to return to the residential property market with investor lending up 31 percent over the four months to February, according to Westpac chief executive Peter King.
After a challenging 2020, the Australian economy is now rebounding with consumer sentiment at its highest level in more than a decade, he said on Monday as the bank - buoyed by an economic recovery - posted a strong 2021 first-half cash profit of $3.53 billion.
“Most significantly, unemployment is falling and there are more people employed now than pre-Covid. A strong labour market will continue to support growth in the economy,” he added.
“While challenges remain, we expect the Australian economy to expand by 4.5 percent in 2021, supporting a 4.6 percent increase in total credit with residential lending expanding 6.5 percent. King added that new lending for housing has surged, up 49 percent over the past year, including a 75 percent jump from the May 2020 low.
While most interest has been from owner-occupiers, he went on to say, investors are beginning to return to the market, with investor lending up 31 percent over the four months to February. “While we expect continued increases in home prices, as the supply of houses for sale increases, the rate of house price growth will likely moderate,” King stated.
In his view, businesses are positive, with most industries responding to the brisk rebound in activity and the winding back of Covid-19 restrictions.
On his estimates, overall business investment is forecast to expand by 3.7 percent in 2021, centred on a 12.5 percent lift in equipment.
Turning to Westpac’s operations, King said while there remains significant work to do, the bank has made good progress in implementing its 'Fix, Simplify and Perform strategic priorities; “We have made good progress this half and remain focused on improving the performance of our key businesses, including reducing loan approval times,” he said.
“I am committed to delivering on the comprehensive plans that are now in place, including strengthening risk management, growing our core franchise, and delivering a competitive cost base. “With a stronger economic outlook, and as Westpac becomes a simpler and stronger bank delivering more for customers, we are well-positioned to deliver returns for shareholders.”