Moderating lending eases concerns around property market
While many may have had concerns with rocketing prices for real estate in Sydney and Melbourne, it seems that fears of the property market becoming too hot can be set aside. According to the latest data from the Australian Bureau of Statistics (ABS), home loan financing in Australia has continued to moderate.
The Real Estate Institute of Australia (REIA) noted that with refinancing excluded, February was the fifteenth month of consecutive, modest drops in in lending levels. There are still hot pockets of activity, with houses for sale in New South Wales, Victoria and Tasmania attracting a fair amount of mortgage finance, according to trend figures.
“With moderating housing lending and GDP growth below trend, the concerns of an over heating property market should be laid to rest,” said Neville Sanders, REIA president, in a 10 April statement.
There is still a lot of rebalancing that needs to occur in the housing market as homes for sale are still being snapped up, largely by investors. The Housing Industry Association (HIA) reports that ABS figures reveal that investor activity, although slowing by 3.4 per cent, is 9.9 per cent higher than it was a year ago.
Although investment in new building may add to the housing stock that Australia desperately needs, over 90 per cent of investor lending is for established homes.
The figures for first home buyers reveals an almost reversed trend when compared to the increase in lending for investment properties.
“Lending activity in the first home buyer market remained quite weak. The number of loans to first home buyers in the three months to February 2015 was around 8.2 per cent lower than the corresponding period a year earlier,” said Geordan Murray, HIA economist.
As a proportion of all owner-occupier lending, this is quite significant for first time buyers. The number of private persons seeking home finance has decreased by 0.9 per cent in February, to reach a level just under five per cent lower than a year ago.
With investors twice as active as home buyers, and first timers around half as present in the market, there is plenty that can be done to ensure that home ownership remains a viable goal for Australians. At a government level, addressing tax reform is a major step towards this. At an individual level, choosing to work with a real estate agent with your best interests at heart could help you towards home ownership – whether it’s your first purchase or fifth. Your local Ray White agents will be happy to help you find a home that is affordable and comfortable for your family.