Investors continue to dominate the housing market – particularly in NSW, Queensland and Victoria – but a cool change is forecast over the quieter winter months with a tough Federal Budget to curtail spending.
Figures compiled by AFG show a surge of investor home loans in Queensland over April. The mortgage broker recorded that loans to investors accounted for almost two out five (38 per cent) of home loan arranged over the month, up from 32 percent in February.
NSW remains the most investor-dominated market with almost one in two home loans arranged by AFG brokers over April for investment purposes.
Investors accounted for a third or more of home loans arranged in Victoria, South Australian and WA over April.
The pick-up in investor activity came at the expense of first-home buyers, which accounted for just 3 percent of the market in NSW and 5 per cent in Queensland. Nationally, first-home buyers accounted for just 10.1 percent of the market in April, down from 10.7 percent in March. First-home buyer numbers were healthiest in WA, at 22 percent of the market.
‘Investor activity does seem to be gathering pace in Queensland,” said AFG general manager Mark Hewitt. “That said, the very low numbers of first-home buyers, both in New South Wales and Queensland, makes investor activity seem proportionally higher than in states like Western Australia where there is a more even mix in borrower types.
“Helping first-home buyers get on the ladder should be a much more urgent priority for the governments of both New South Wales and Queensland,” he said.
AFG is Australia’s largest mortgage broker, accounting for around one in 10 home loans arranged. Its figures are released more than the month ahead of official Australian Bureau of Statistics housing finance data providing a good indication of the national trend.
Overall home loan numbers fell to 8517 in April from 9264 in March or nine percent in monetary terms to $3.68 billion.
AFG attributed to this decline due to the impact of the Easter and Anzac Day public holidays at the end of April.
Figures from RP Data show that auction sales rebounded in the past week, following low sales activity due to the holiday period. House price momentum remains strong in Sydney, Brisbane and Adelaide, but has moderated in Melbourne.
“In the coming weeks, the expected continued rebound in auction listings will likely test the depth of home buyer demand and the outlook for further price gains,” said ANZ property analyst David Cannington.
Linda Phillips, head of research at property valuers Propell said the property market faced a tough winter period.
“Forget the past. It is now May and the market faces headwinds in the form of the traditionally slower winter months, the painful federal government budget and rising unemployment,” said Linda Phillips, head of research at property valuers Propell.
“Any impetus from the declining interest rates of last year has now worked through the market. The federal budget is likely to impact badly on consumer confidence and strip demand from the market which may need a further lowering of interest rates to restore spending.”
While she said the housing market was unlikely to be the subject of direct attacks on the budget, the greater risk came from the expected reduction in government spending and employment levels.
“We are likely to see a correction in house prices during the winter months with median price reductions in some states.”
The dominance of the market by investors pushed down loan-to-value (LVR) ratios to 66.7 percent in April from 68 percent in March, according to AFG. Investors typically use equity in existing properties to support their new purchases.