Owner occupiers & first home buyers edging out investors

Owner occupiers are driving the mortgage market and first home buyers are back at open houses and auctions in droves. New home loan sales were up 2 per cent in October 2019, according to the Australian Bureau of Statistics.

Lending to owner occupiers was up 2.2 per cent and first home buyers represented almost a third of the owner-occupier market, excluding refinancers. New lending to property investors was up 1.4 per cent in October but down 9.7 per cent over the year.

Now easier to afford a home

Housing affordability seems to be improving in Australia.

Last month, CoreLogic's Property Pulse study indicated that, over the last 10 years, housing costs have risen at the same pace as incomes.

This was good news for homebuyers as it is now easier to pay off their homes, especially with interest rates are at record lows.

And high end properties in Sydney and Melbourne have bounced back.

“The RBA’s interest rate cuts, loosening of credit restrictions, significant improvement in buyer confidence and increased auction clearance rates provide strong indications regarding these markets,” says RiskWise Property Research CEO Doron Peleg.

“Buyer sentiment in relation to housing measures has noticeably improved and the Westpac-Melbourne Institute’s House Price Expectations and Time to Buy a Dwelling Indices show a consistent trend.

“Auction clearance rates have recovered and are above 70 per cent in Sydney and Melbourne.

“As we predicted immediately after the election and in our previous Risks & Opportunities Reports, the market has materially improved with affordable areas that have shown resilience recovering well. Other areas, including lucrative ones that experienced strong price reductions, are now leading the way to this recovery.”

The following chart from Westpac highlights consumer confidence in the property market with housing finance approvals increasing:

High-end properties are far more sensitive to credit restrictions. On the other hand, properties at the lower end of the scale are subject to less restrictions and could provide excellent buying opportunities.

“Lower-end properties are less subject to credit restrictions and investor activity which actually make them a great buying opportunity. In fact, in some cases areas, such as Geelong, even benefited from the lending restrictions as buyers looked for more affordable options,” Peleg said.

High crime areas ripe for gentrification are areas to look out for. Due diligence applies.

There are certainly bargains to be had if you look in the right areas. See what areas you can afford here. Keep up to date with the latest interest rates outlook for Australia at InfoChoice.

Compare home loans from Australia’s banks and other lenders at InfoChoice.

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