Australia’s real estate market is getting a nice boost from first-time buyers, thanks to increased access to lending, stable prices and low interest rates. Investors favor New South Wales and Victoria, while non-banks are an increasingly popular source of mortgage loans. See the following article from Property Wire for more on this.
The political climate in Australia remains fragile but the real estate market has had a boost with first time buyers helping sales jump 11% in August.
The latest real estate figures to be published shows that home and mortgage sales jumped as homebuyer confidence strengthened and mortgage delinquencies stabilized.
With the Reserve Bank keeping official interest rates on hold, property sales across the nation were 10.9% higher than in July, the figures from the Australian Finance Group (AFG) show.
And for the second consecutive month, sales to first time buyers climbed from 9.5% of the market in June to 11.7% in August.
Australia’s biggest mortgage broker said first time buyers share of the mortgage market bottomed at 9.5% in June, before climbing to 11.1% in July and 11.7% in August. The trend was strongest in New South Wales with sales to first time buyers making up 15.5% of all sales, up from 11.7% in June.
‘We now have two months of data which show that first home buyers are coming back,’ said Kevin Matthews, executive director for mortgage broker AFG.
The report also shows greater competition between lenders on price and policy and increasing loan to value ratios that are supporting both entry level home buyers as well as property investors.
Matthews also said the impact of the government grants, which had the effect of bringing forward first time buyer demand, seemed to have ‘washed through the system’.
‘With property prices in many areas having stabilized, and some lenders prepared to lend up to 95% of the property’s value, property is becoming more accessible to first home buyers and more attractive to investors,’ he explained.
Property investor activity varied across the states, with New South Wales and Victoria topping the market. Almost 37% of all mortgages sold in New South Wales came from investors, while in Victoria they accounted for 36.4% of all the sales. By comparison, investor confidence in the mining states of Queensland and Western Australia remained weak, largely due to the uncertainty over a possible mining super tax.
The index also revealed that buyers preferred to take out their mortgage loans with non-banks. Although still accounting for the lion’s share of mortgage loans, bank loans have dropped from 92.5% in the first quarter of 2009 to 87.5% in the second quarter of 2010.
Over the same period, the non-banks have increased their share from 7.5% to 12.5%.
Confidence among homebuyers is upbeat and is now above 2008 levels but has yet to surpass 2009 levels, according to lenders mortgage insurance provider Genworth Financial.
Its latest index of homebuyer confidence shows that 20% of home buyers expect to have repayment difficulties over the next 12 months.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.