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Friday, May 14, 2021

Property news: Investors drive home loan demand

Investors drive home loan demand

New data from the Australian Bureau of Statistics (ABS) has revealed that home loan demand continues to rise.

The latest data from the ABS reveals that, in seasonally adjusted terms, there was an increase in the number and value of home loans to owner-occupiers and an increase in the value of loans to investors over the month of August, following a rise in July.

According to the ABS, 49,792 home loans to owner-occupiers were approved throughout the month of August, an increase of 1.8% on the month prior.

Mortgage Choice CEO, Susan Mitchell, said the continued growth in home loan demand is consistent with the turnaround seen in the housing market of late.

“The result of the federal election took the potential removal of property tax concessions off the table.

“As a result, once-cautious investors may have been encouraged to put their buying plans in action.”

Investors drove the surge in home loan demand over August, with the ABS data revealing an increase of 5.7% in the value of loans to investors (excluding refinance) over the month to over $4.8 billion.

Mitchell says policy and pricing on investment loans are now much more favourable.

“Conditions have not been this favourable for all parts of the market in some time, with credit restrictions easing and home loan interest rates sitting at record lows following a third cut to the cash rate by the Reserve Bank.”

Charnwood set for record growth’

Data from Select Residential Property Research Group’s (SRP) suburbgrowth.com.au predicts the Belconnen suburb of Charnwood to see a 27.4% increase, or a rise of $122,949, to its median property price, currently $449,000, over the next three years.

This predicted growth sees Charnwood make the list as the only ACT suburb in suburbgrowth.com.au’s Top 10 suburbs for future capital growth list, released earlier this month.

SRP’s director of research, Jeremy Sheppard, said the research identified the suburbs with sound market fundamentals, including the economic principals of demand and supply, that apply upward housing price pressure.

“The analysis uses 17 market variables to help us determine the locations with the best chance of superior price growth over the next three years,” Sheppard said.

“These suburbs all have a number of desirable features, however, one of the main reasons why house prices are forecast to grow is an imbalance of demand to supply.

“The thing is, even if prices end up only climbing by half as much as predicted, such is the nature of forecasting, it’s still a great return on investment over a short period of time.”

Confidence bounces back

The ANZ/Property Council Survey for the December 2019 quarter shows that the ACT is leading industry confidence and expectations across most of the segments surveyed.

The ACT led the nation on expectations around forward work schedules and capital growth levels across most asset classes.

ACT executive director of the Property Council, Adina Cirson, said property industry confidence in the ACT is holding up well despite a national downward trend.

“There is an extremely optimistic outlook for the Canberra property market backed up by recent CoreLogic / ABS data shows us weathering the property market storm present in other capital cities.

“This is teamed with data out last week which demonstrates that nine in 10 Canberrans made a profit through home ownership, despite other weaker capital city markets,” Cirson said.

The December 2019 quarter survey showed a 21-point increase in confidence levels in the ACT, up to 144 points, to be well above all other states and territories tracked.

The ACT confidence levels are at their highest point in over 18 months and close to historic highs.

“It is great to see the ACT is not only back on track after a significant dip earlier this year – which was tied to uncertainty during the federal election period and mooted APS cuts,” Cirson said.

“Now is the time to plan ahead with strategic investment and growth policies which meet the demands of a growing and ageing population, which in turn creates jobs and keeps Canberra punching above its weight.”

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