Rateseeker October 2022 Property News Round-up
As supply chains struggle to keep up with demand, consumers are urged to start their Christmas shopping early this year. While Aussies indulge in retail therapy, the property market is also facing some big news.
Recent data has revealed that the rental market is strongly in favour of investors, with rents rising and numbers expected to rise further, it’s never been a better time to be an investor.
Prospective borrowers who are looking to purchase are also faced with a lower ceiling to their borrowing capacity compared to April 2022, with rate hikes making it harder for Aussie buyers to qualify for a home loan.
Although home loan activity has fallen since earlier this year, first home buyer groups are holding up better than investors and subsequent owner occupiers.
Not only are buyer habits changing, the way Aussies are making payments continues to evolve with a rise in electronic payments and buy-now-pay-later alternatives.
Missed the latest property news? Don’t miss out, here are the biggest stories below.
Rental market strongly in favour of investors
New data has revealed two fundamental reasons why rents, which are already rising steeply, are set to continue increasing for the foreseeable future.
PropTrack’s economist Angus Moore reveals the first factor at play is that the quantity of properties listed for rent is much lower than pre-pandemic numbers, in both capital cities and regional areas, so supply has fallen significantly.
Second, data from the Australian Bureau of Statistics shows a huge increase in migrant and foreign student numbers. That means demand is rising and as migrants return to Australia, suitable property will continue to be a challenge to find for many.
Moore explains that the extra demand from returning migration amid tight housing availability will contribute to the ongoing rapid advertised rent price growth we are seeing.
Mr Moore believes that rents are likely to continue growing briskly in the foreseeable future along with vacancy rates remaining low across much of the country and, with population growth returning, rental demand will show little sign of tempering.
If you’re thinking about buying a property instead of renting, 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.
Why Aussies can’t borrow as much as they could 6 months ago
The hike in interest rates since April this year has made it harder for Australians to qualify for a home loan, and has emphasised how important it is that they get help from the right mortgage broker.
According to the Reserve Bank of Australia’s head of domestic markets Jonathan Kearns, each time the RBA delivers a rate increase of 0.50 percentage points, this slices off an average borrower’s maximum loan size by about 5%, a hard hit to many prospective buyers looking to enter the market.
Since May, the Reserve Bank has increased the cash rate by 2.50 percentage points – which means the average person’s borrowing capacity taken a fall by about 25%.
The main factors to highlight here are the words ‘average’ and ‘about’ – this is due to borrowing capacity varying not just from person to person but from one lender to another. Two different banks can offer the same borrower significantly different maximum loan amounts; sometimes, they might be more than $100,000 apart. This could mean the difference between buying your dream home and missing out.
With borrowing conditions becoming more challenging , it’s vital you seek guidance from an expert broker.
At Rateseeker we work with a large panel of lenders, so we can determine which lenders would be more likely to offer finance to borrowers in different circumstances. Get in touch with our team today and we can help you find the sharpest rate on your home loan.
How different buyer groups respond to a changing market
Home loan activity has dropped since earlier this year, however demand among first home buyers has held up better than that of other buyer groups.
Between April, when national property prices peaked, and August, the most recent month for which we have data, total home loan commitments fell 13.9%, according to the Australian Bureau of Statistics.
However, the drop in activity varied between the different buyer groups:
- Investors down 20.1%
- Subsequent home buyers (owner-occupiers) down 10.8%
- First home buyers (owner-occupiers) down 9.9%
CoreLogic‘s head of residential research, Eliza Owen, who has been analysing downturns since 2004, revealed that first home buyer demand for finance during downturns has traditionally been quite resilient, with smaller falls in demand compared to the other two groups, and sometimes even increases.
Ms Owen explained that there were two main reasons for this:
- Governments typically introduced first home buyer incentives during some of these downturns
- Price falls made it easier for first home buyers to save for a deposit and enter the property market
Are you a first home buyer looking to buy your dream home? Get in touch with our team of expert brokers today and we can guide you through the process from pre-approval to settlement.
Cash is no longer king. Make way for alternative payments.
The way Australians make and receive payments is continuing to change according to the Payments System Board that sits within the Reserve Bank.
Over the past 12 months, there has been growth in electronic payments, new payment types (e.g. buy now pay later) and the New Payments Platform, according to the board’s annual report.
During this time, there has been an ongoing decline in cash payments, a trend that has been occurring quite a few years now.
The report also revealed that the Payments System Board would continue its research on central bank digital currencies – a digital form of money that might be issued by the Reserve Bank and used by households and businesses.
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.
** General Advice Warning
The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.