Increased loan applications signal a re-energized Australian real estate market, supported by sound fundamentals, an expanding population and conservative development. Slumping demand didn’t hamper residential prices, and with interest rates now in check, investors and entry-level buyers are ready to return. See the following article from Property Wire for more on this.
There may be a slowdown in demand for residential real estate in Australia, but the industry is quietly confident that the market is strong amid signs that home loan applications are on the rise, analysts say.
The slowdown means that investors are now able to pick and choose more and that is encouraging first time buyers back to the market, they point out.
And even although real estate agents and mortgage brokers report a slowdown in demand for homes, industry bodies say the median national house price rose by more than 3% in the June quarter of 2010.
‘The fundamental for property are still very strong, We have strong population growth and we have been under building and it is likely that with more certainty around interest rates, potential investors and home buyers will move back into the market place,’ said CommSec economist Savanth Sebastian.
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However, he added that any strengthening in the housing sector would be more sedate. ‘I don’t see it surging back as it did with the stimulus, rather it would probably be a much more subdued recovery,’ he explained.
The latest official housing finance commitments data for owner occupied housing shows a larger than expected 1.7% rise in July from June. The figures from the Australian Bureau of Statistics (ABS) also show the proportion of total housing finance commitments taken out at fixed rates increased to 4% in July from 3.4% in June, indicating a possible turnaround in investor demand.
Analysts Adam Car of ICAP also believes that investors and first time buyers are beginning to return to the market. ‘It’s an early sign, a tentative sign that we’re seeing a turnaround. It was the pace of interest rate hikes which scared people rather than the level of rates per se,’ he said.
Last week the Reserve Bank of Australia (RBA) left the official interest rate on hold at 4.5% following six rate rises in the past year.
Nomura Australia chief economist Stephen Roberts said the housing finance figures indicate a ‘rekindling’ in the established housing market. ‘The decline in the demand for first home buyers is coming to an end,’ he said.
Also the latest figures from the Real Estate Institute of Australia (REIA) show that the residential property sector is still healthy in most capital cities. The median average house price of $533,243 was 3.2% higher compared to the March quarter of 2010 and 16% higher compared to the June quarter of 2009.
Melbourne house prices increased 26.5% over the year but on the ground agents are not as optimistic. For example, Ray White joint chairman of the Brian White group, said sales in Melbourne and Sydney were ‘relatively subdued’ in August while country areas performed better.
The group has found that areas such as Rockhampton and Toowoomba in Queensland, the Central Coast of New South Wales, the northern communities of Western Australia and a number of others including the Northern Territory are performing better.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.