You can feel it- the property market is on the move again.
After falling since 2017, last month prices rose in both Melbourne and Sydney. These 2 cities enjoy the strongest economic conditions in Australia and are the first to return to positive growth.
Factors that led to this change in the market momentum include:
- An increase in confidence since the Coalition has won the Federal Election
- APRA easing bank’s assessment criteria for new loans – this will likely come into affect in the next month.
- Two interest rate cuts and the prospect of more to come
- Banks passing on the home loans with some cutting rates even before the most recent RBA “official” cut in rates
- Tax cuts are on the way – more money in our pockets (Read ATO Blitzed- $1080 tax cut)
- The best housing affordability nationally since 2016.
- Positive messages in the media lifting consumer confidence.
- First home buyers returning to the market encouraged by government incentives (Read New First Home Buyer Scheme)
The Australian market has signalled early improvements in buyer confidence at property auctions, according to CoreLogic, in the days after the rate cut announced last Tuesday.
Data from the first week of July has shown a clearance rate of 68.92% nationally for properties listed for auction. A number up from the 66.5% rate the previous week.
The number was even higher in Sydney where a 78.24% clearance rate was seen, up from 72% the previous week.
Assistant finance minister, Zed Seselja, expressed his positive outlook to The Australian.
We are already starting to see since the election the signs of a turnaround in the housing market.’
‘I think there is a growing confidence in some of our housing sectors. We have seen (that in) some of our auction clearance rates just this weekend.
‘I think there were a lot of people holding back with the fear of what could have come if the Labour Party had implemented their taxation policies.
‘With the various settings, I think we would expect to see some housing growth in the coming years, absolutely,’ Senator Seselja said.
Numerous first-home buyer and owner occupier incentives have come/are coming into play since the election. Investors haven’t seen the same incentives so have been slower coming back in to the market.
However, strong rental returns in the current low interest environment could prove a big temptation for investors to re-enter the market.
So, What’s ahead for the Australian Property Market?
Well, we’re in an interesting period with indications of bottoming out.
Lower mortgage rates, income tax cuts and rising wages fuel market confidence. Servicing mortgages will become a little easier, although getting a loan will still remain under more scrutiny than previously.
The Finance Team at Dollars With Sense enjoy helping clients navigate the increased level of scrutiny in obtaining loans. If it’s your first home, or if it’s time to renovate, refinance or invest, we’re here to help make it happen.