Many of our customers want to know what’s happening in the Australian property market. The fact is there’s more cashed up buyers than ever before. The latest data from the national statistician shows that home buyers took advantage of a virus-flattened housing market in August, as borrowing rose by 12.6 per cent on the previous month.
New loan commitments for housing worth $21.29 billion were recorded in August, according to Australian Bureau of Statistics. Data shows owner occupiers had the record increase. They borrowed 13.6 per cent more ($16.28 billion total) – the largest month-to-month rise in the history of the statistics! So the appetite for housing credit has never been stronger. The previous record was the 10.7 per cent gain set in July this year.
The bureau said that lenders reported the August figures reflected customer demand from June and early July. New loans for owner occupiers rose in all states and territories except the Northern Territory. Investors increased the value of their loans by 9.3 per cent ($5.01 billion). Yet lending slipped in other categories. Personal loans fell by 12.5 per cent for August to $1.38 billion. This was mostly due to consumers having less interest in buying vehicles.
No doubt housing loans may be boosted too next year after the federal government last month flagged it wants to relax lending rules even further. Lenders would be able to rely on borrower-provided information unless there are reasonable grounds to suspect it is unreliable.
If parliament passes the bill, the rules would take effect from March.
Looking forward, there may still be more tailwinds to come. The Reserve Bank of Australia (RBA) left the cash rate on hold last week ahead of the federal budget but hinted in the final sentence of the statement on the decision that “additional monetary easing” is still possible. A recent address by Deputy Governor Guy Debelle carried the same messaging. Lower interest rates, together with easier access to housing credit could create further housing market demand, given prices have historically increased against a lower cost of debt and greater availability of housing finance options.
Despite all this, we know there are economic risks on the horizon. The RBA’s half- yearly financial stability review released on Friday shows many households suffered income falls due to job losses, reduced working hours and lower wages. Most of the impact was offset as people sought loan repayment deferrals and the federal government provided cash support though programs like JobKeeper and JobSeeker,
as well as allowing access to superannuation.
The RBA said it was uncertain whether households that have strengthened their financial position by saving would soon spend that money. Still, with unemployment set to peak around eight per cent in the December quarter – according to last week’s federal budget – households are
not yet out of strife.
The RBA also warned that house prices could fall affecting many more Australians. There was potential for mortgage holders in distress to sell their homes, bank officials said, while Australia’s closed borders means weak population growth.
What many economists are saying that the next 12 months may hold:
• JobKeeper and JobSeeker support winding back by March;
• International borders remain shut;
• Mortgage deferment support extended by all the major banks;
• Unemployment tipped to significantly rise; and
• The number of properties for sale will increase and
create more choice for buyers.
On Saturday, one of our sellers Alison Greer of Chippendale (pictured above with her agent Ercan Ersan of Ray White Erskineville) said she believed now was a good time to be selling and buying.
“I have just bought a house nearby at a good price so I think if you are buying and selling in this market then now is a good time to go. I am no expert but I feel like next year might offer some challenges so I believed now was a good time to go,” Ms Greer said.
“Ercan has been great to work with. He’s been so honest with me, and the buyers, and he’s handled the campaign in a very calm manner. I feel surprisingly relaxed about the whole thing.”
What we do know is market fundamentals right now are helping our clients who are looking to sell. Our data tells us that our auction clearance rates are the strongest they have been since March and we call one in three auctions nationally. So there’s a deep buyer pool for sellers to take advantage of right now. Our question is, “What are you waiting for?”