Rateseeker September 2022 Property News Round-up
With the change of seasons into spring, and the effects of El Niña’s unpredictable weather across the country, the property sector has also seen some big changes.
Despite a fall in loan numbers buyers remaining active and continuing in their search for their perfect home, while we explore the semantics of the extraordinary hike in Aussie home prices of 382% over the last 30 years.
Buyers are also being warned about Buy-now-pay-later services, having potential implications to home loan applications and why this is important for buyers looking to finance their first or next home.
Additionally, rents have continued to rise across the country and we look further into how this has affected the total number of listings across all major cities.
Missed the latest property news? Don’t miss out, here are the biggest stories below.
Home loan activity dips, yet remains well above long-term average
Recent data from the Australian Bureau of Statistics, shows that despite a dip in home loan activity, there are still many buyers in the property market waiting for the right opportunity.
Aussies borrowers have since signed up for over $28.4 billion of new home loans in July, a figure standing 11.3% lower than the previous year, yet still 47.3% higher than the average over the last 15 years.
Albeit market conditions currently in a buyer-friendly state compared to the recent property boom, there remains a significant amount of buyer competition, especially for homes that tick all the boxes and are deemed high quality.
In line with market cycles and varying conditions among the capitals cities:
- Hobart listings in July spiked 70.0% higher than the previous year
- Sydney increased by 30.7%
- Canberra increased by 24.8%
- Darwin increased by 14.4%
- Melbourne increased by 10.0%
- Perth increased by 4.6%
- Brisbane decreased by 0.7%
- Adelaide decreased by 3.6%
If you’re thinking about buying a property, it’s vital to seek pre-approval before you begin the searching process. Get in touch with us at Rateseeker, we can help un-complicate the process and help you find out how much you can borrow.
Over the last 3 decades property prices have increased 382%
It’s well known that property prices fluctuate, however whether they go up or down, historical data suggests that in the long term we can expect prices to increase.
Recent data from CoreLogic’s analysis of property prices over the last 30 years till July 2022 suggest that property can be a great investment over many years.
Australia’s median property price skyrocketed to 382% during that 30-year period. Houses have significantly outperformed units (453% v 307%) with metro locations outperforming regional locations (409% v 294%).
A key factor to remember is that property prices had grown significantly, despite regular downturns and market shifts, and not because there were no significant changes within the market.
Over that 30-year period, we have seen six distinct cycles of growth and an equal number of cycles of decline (including the current downswing) across the national index,”
“Each of the upswings and downturns have been characterised by different environments and catalysts of change such as taxation policy, monetary policy decisions, economic shocks, fiscal stimulus and broader economic conditions.”
Corelogic
Although past performance is no sure thing to guarantee future performance, precedent suggests that home owners who do their research and purchase quality properties and hold them for the long-term see significant growth in capital.
Ready to purchase your dream home and grow your wealth? Get in touch with our expert brokers today at Rateseeker and we can help you find the perfect loan for your circumstances.
Increase of Aussie consumers using pay-later options
As the financial landscape continues to deliver rising interest rates, Aussie consumers are embracing the use of credit cards and buy-now-pay-later services. Whether you’re shopping online or in-store, these pay-later options are becoming increasingly popular and accessible.
There is however a downside to using these services, as aspiring borrowers discover potential implications when applying for home loans.
According to Equifax, one of Australia’s big three credit bureaus, applications for credit cards in the June 2022 quarter spiked by 6% compared to the June 2021 quarter.
During this same period, buy-now-pay-later (BNPL) applications skyrocketed by 42.2%.
Typically lenders analyse these types of spending habits when they assess home loan applications. Whether you’re just using your credit card for bills or small purchases infrequently, lenders generally assume you’ll use your entire credit limit each month, even if you don’t. What’s more is that lenders will check to ensure you’ve been making your repayments on time, any defaults or black marks could affect the outcome of your loan application or your borrowing power.
If you’re looking to increase your borrowing power, there are a few options you can use such as reducing your credit limit or cancelling your credit card and paying via debit card instead.
The reason why using pay-later services can affect your borrowing power is because lenders may assess the amount you can realistically be trusted with. With a tonne of non-essential purchases, this might make you seem as if you may not be able to pay the total amount at the time. So by calling it quits on the pay-later services or reducing it to only when absolutely necessary, this can help protect your borrowing power.
Why rental increases are sweeping Australia
Rental listings have fallen in seven of Australia’s capital cities compared to the start of the pandemic, according to realestate.com.au.
The portal has reported that the number of rental properties across Australia was 31% lower in July 2022 than March 2020.
Listings declined in every capital city except Canberra:
- Darwin down 54% (between March 2020 and July 2022)
- Brisbane down 42%
- Perth down 42%
- Adelaide down 38%
- Sydney down 30%
- Hobart down 25%
- Melbourne down 8%
- Canberra up 33%
Amazingly, rental listings declined even more in regional locations, ranging from a 25% reduction in regional Victoria to a 63% reduction in regional Western Australia. Unsurprisingly, the fall in rental listings has led to:
- An increase in the number of potential renters per listing
- A decrease in days on market
- An increase in rental rates
As rental price pressures continue in the period ahead, this could increase the attractiveness of buying for some current tenants.
Elenor Creagh – rea group senior economist
Looking for your first or next home? We’re experts at finding the right home loan for you. Get in touch and speak to one of our experienced mortgage specialists for personalised help, guidance and the sharpest rates for your home loan.
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