Buyers Target Existing Homes

The number of loans to owner-occupiers rose 10% in November, bringing the monthly total to $13.4 billion, 1.6% higher than October, show official figures. “The housing market is on its way back,” says CommSec chief economist Craig James. That means more homes will be purchased and create flow-on demand to a raft of businesses including removalists, real estate agents and homewares retailers.” But the growth is likely to be steady, says JP Morgan economist Ben Jarman. “At the current pace of credit growth, households are still de-leveraging, so housing is neither adding much upside to consumption, nor is it a constraint to further monetary policy easing.” The latest quarterly survey by the ANZ/Property Council of Australia suggests that a pick-up in construction is yet to take hold, showing that home buyer activity is concentrated on established dwellings. During November, the number of owner-occupier loans for the purchase of existing dwellings was unchanged while the number of owner-occupier loans for construction of new dwellings fell 8.4%.

Buying Intentions Hit Record High

Consumers are planning to spend money on housing, cars, entertainment and travel, shows the latest survey of the Commonwealth Bank Household Spending Intentions. CBA Chief Economist Michael Blythe says: “The home-buying intentions series lifted again and is now at a record high. There are some early signs of a ‘wealth effect’ from the housing market supporting spending on motor vehicles, albeit from a very low level, as well as travel and entertainment”. Blythe says the home-buying HSI readings mean the pick-up in dwelling prices in the second half of 2019 will continue into the first half of 2020, and the residential construction downturn should be approaching bottom. “Past cycles show that leading indicators like building approvals turn about three months after home buying intentions start to lift,” he says. “A bottoming in the construction cycle would remove a major growth drag on the economy, and also helps retailing.” Building approvals rose 11.8% in November – the strongest growth in total dwelling approvals since February 2019.

Home Hunters Keep Brokers Busy

Mortgage brokers are reporting busy times as first-home buyers take advantage of the Federal Government’s First Home Loan Deposit Scheme. But other owner-occupiers and investors are also keen, say mortgage brokers. The trend is most noticeable in Melbourne with Foster Ramsay Finance principal mortgage broker Chris Foster-Ramsay saying he was “flat out” processing applications. Since November, his appointments have been up 200% year-on-year to date. Most applications have come from first-home buyers and upgraders with many interested in Melbourne properties in the $600,000 to $700,000 range. “There are decent properties close to transport, schools … what that means is as soon as property is coming on in those fringe suburbs anywhere between the $300,000 to $400,000 range, the competition is excessive.” Melbourne-based 40Forty Finance director and mortgage broker Will Unkles says business is booming with inquiries significantly stronger than six months ago. Elsewhere, Sydney-based The Lending Alliance mortgage broker Keegan Rezek agrees the overall volume of home loan applications has picked up recently.