Property market outlook

Confidence up as loan rules loosened (8 July 2019)

Confidence in the property market has jumped since the federal election and auction results are improving.

Auction clearance rates continue to improve during winter 2019 on lower overall volumes. 289 residential property auctions in Sydney on the weekend of 6 and 7 July 2019 produced a clearance rate of 69 per cent according to Domain.

In Melbourne 338 auctions produced a clearance rate of 68 per cent. CoreLogic is reporting much higher preliminary clearance rates, well into the 70’s, for both of the big capital cities.

In Adelaide, 67 per cent of 70 auctions produced a sale while in Brisbane 41 per cent of 51 auctions were successful for the vendors according to CoreLogic. The national weighted average clearance rate of capital city auction results for the weekend was a healthy 69 per cent.

Confidence in property markets has jumped up in June, flowing the re-election of the Morrison government on the 18 May, according to new research from ANZ Bank and the Property Council of Australia (PCA).

“Following the federal election, we have had a quadrella of positive policy news,” said Ken Morrison, chief executive of the PCA.

“Certainty on negative gearing and capital gains tax changes, an interest rate cut, APRA’s lending standards review and the proposed first home buyers loan deposit scheme.”

ANZ economist David Plank said recent data suggested the property market is looking forward to better times ahead.

APRA’s new lending standards make loans easier to get for thousands of Australians. Tax cuts delivering a bonus $1080 to many Australians will filter into property market results in coming months.

“All Australian banks, credit unions and other lenders received an official letter last Friday from the chairperson of the Australian Prudential Regulatory Authority loosening the guidelines for approving new mortgage applicants,” said Vadim Taube CEO of InfoChoice.

“The new ‘serviceability assessment’ guidance means getting a home loan is now easier for most borrowers and many borrowers will be able to get approved for bigger loan amounts than they previously would have been eligible for.

“Lenders are now required to add 2.5 per cent to the headline interest rate and then assess your ability to keep up with those higher repayments.”

“A borrower applying for a $300,000, 25 year home loan at 3.5 per cent variable rate will make repayments of around $1502 per month according to the InfoChoice home loan calculator.

“Now that borrower will be assessed on their ability to make repayments of $1933 per month, as if rates rose by 2.5 per cent to 6.0 per cent.

“Under the previous assessment guidelines, the borrower would have to show they could repay $2168 per month to get their loan application approved.

“That is big difference of $235 per month for the average household looking to buy a home.”

Compare Australia’s top home loans at InfoChoice.

Property market showing signs of life (4 July 2019)

The slide in Australian home prices is slowing and improving auction results indicate a possible bottoming of the property market is in sight.

Auction clearance rates in Australia continue to improve with almost 63 per cent of residential properties put up for auction last weekend selling.

Melbourne’s clearance rate of 68.6 per cent from 535 auctions remains strong while Sydney’s 68 per cent clearance rate from 503 auctions is an improvement over recent results.

Home prices fell in May 2019 by an average of 0.4 per cent across Australia according to the latest monthly data from CoreLogic. Average Sydney prices were down 0.5 per cent and Melbourne prices fell 0.3 per cent in May.

Meanwhile, the Australian Bureau of Statistics (ABS) reports that total home building approvals were flat in May 2019 (up just 0.7 per cent from April) after two months of sharp falls.

Private sector house approvals were down by 0.3 per cent in May.

Real Estate Auction Results (23 June 2019)

Auction clearance rates continue to point to an improving property market across Australia.

1,480 homes were listed for auction in capital cities on the weekend of the 22 and 23 June 2019 with 63.7 per cent selling on the day (preliminary figures). Those numbers were down only slightly from the 12-month highs of the previous weekend when 1,505 homes were put up for auction with a clearance rate of 61.8 per cent.

In Melbourne, 644 auctions produced a preliminary clearance rate of 69.7 per cent. In Sydney, 551 auctions produced a clearance rate of 67.1 per cent.

Both Melbourne and Sydney auction results were well up on the results from the same weekend one year ago.

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

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