Falling property prices and lower interest rates are drawing buyers back into the property market, giving Australia’s gloomy lending sector some cause for optimism.
There were almost 18 percent more first-time buyers entering the market in the year to August, compared to the previous 12 months, according to Australian Bureau of Statistics data. The wider market was up more than 6 percent compared to last year, with over 100,000 home loans settled in that period.
Known as “Super Saturday”, October 27 was the busiest day of the year for real estate agents, with thousands of homes going under the hammer.
“People selling their homes are becoming a bit more confident of their prospects,” Robert Larocca of the Real Estate Institute of Victoria told Ten News.
Across Australia, 2483 homes were auctioned over the weekend, with Melbourne once again proving its title as auction capital, with 1180 homes up for auction. But there was plenty of action in other major cities as well with 530 auctions taking place in Sydney and 181 in Brisbane, according to RP Data.
Luke McPhee of realestate.com.au said: “About 46 percent of vendors say this is the best time to sell their home and there’s a perception that there’s more buyers out in the marketplace.”
The end of year deadline is looming for house hunters running out of time and options, according to Simon Doak of real estate agency Bresic Whitney.
“The shortage of stock throughout the year has started to frustrate buyers into making decisions,” he told Ten News.
Results from the weekend should reveal the true state of the residential market; clearance rates have been climbing.
Meanwhile house prices remain subdued around the country, RP Data reports suggest. Year on year, home values fell in Adelaide, Brisbane and Melbourne, while Sydney posted only modest growth of 0.51 percent. Perth home values were the exception; growing at 4.1 percent compared to last year.
McPhee: “It’s a good thing that we’re turning over lots of properties this time of year and moving into the Christmas and summer break there will still be a lot of activity.”
The next super Saturday will be mid-November and that of course will be after Melbourne Cup day, a day which for the past six years the Reserve Bank has changed interest rates, which plays a huge role in the decision of buyers.
While the signs are good, buying a home is a big commitment and would-be buyers are being urged to do their homework and budget for future rate increases.
“When interest rates are low and house prices steady or falling, home ownership can seem more attractive for those looking to enter the market,” said Michelle Hutchison, spokeswoman for RateCity.
“But you should allow for what we call a mortgage repayment buffer, and do your budgeting using an interest rate that is at least 1 percent and maybe 2 percentage points higher than current interest rates.”
“Finally, take some time researching your home loan because the amount of interest you pay can vary by tens of thousands of dollars, depending on the lender. So compare home loans using a free site like RateCity, because that money is better off in your pocket!”