Spring Buying Conditions

The property market for this Spring is looking markedly more positive than Spring 2018. In the past 12 months realestate.com.au has seen a 25% increase in searches, with each major increase in searchs occurring after a number of major events. The Federal Election, interest rates cuts, income tax cuts and reductions in APRA lending regulations. 

Home buyers are now re-entering the market with an increase in consumer sentiment following a number of key events over the past 12 months.

Market confidence increased as a result of the federal election with the Coalition win providing greater certainty around tax incentives. 

Income tax cuts came into effect at the start of the financial year, with the new low and middle income tax offset announced in the 2019-2020 budget and has now become law. Household offsets for 2019 saw and increase from $530 to a maximum of $1080 depending on household income. Income tax cuts have helped with increased consumer confidence, which has remained lower than expected and will see additional money in consumer pockets. This is predicted to increase with further income tax cuts planned over the next 4 years.

Two interest rate cuts have made home loans more affordable than they were 12 months ago. With reduced interest rates, repayments are lower and making home loans more affordable to consumers. The RBA is predicting another two further rate cuts over the coming 12 months. 

In addition to interest rates coming down, access to finance is now becoming easier. After the royal commission into banking the Australian Prudential Regulatory Authority (APRA) implemented a number of restrictions on lending. Since December 2017 responsible lending requirements has seen the highest levels of home loan applications being declined. APRA has now relaxed the stress test imposed on borrowers making finance easier to obtain. 

The base assessment rate for borrowers has been 7.5%, meaning that when applying for a loan you need to be able to afford the loan repayment if the interest rate was 7.5%. This has seen many borrowers unable to borrow the required funds and consequently has contributed to the slowing of the housing market.

The new serviceability assessment rates are seeing lenders applying a 2.5% buffer to their advertised interest rates. Loans are now again becoming accessible for homebuyers to access the finance required to purchase. 

If you have been dabbling in the housing market over the past year and been unsure or unable to enter. Spring 2019 is the time to start the process again. A new visit to the bank or broker may give you a vastly different answer than you may have received 6 months ago. Sellers are now also gaining confidence and we should see an increase in listings. Now might be the time to start looking around for your dream home.