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Big market of buyers push their way into popular property markets

Aerial shot of property

Buyers who previously retreated from the market during the huge price hikes in 2016 are predicted to rejoin as the market shows signs of flattening and restricted access to credit eases. 

The latest Lending to Households and Businesses data from the Australian Bureau of Statistics (ABS) has reported that, in seasonally adjusted terms, the value of housing finance slipped by 2.4 per cent in May.

The decline was driven by a 2.7 per cent fall in the value of owner-occupied credit, while the value of investor lending dropped 1.7 per cent.

Mortgage Choice CEO Susan Mitchell attributed the decline to uncertainty in the market due to the May federal election.


“This decline in home loan demand is unsurprising when you consider the broader context of the macro environment at the time. Leading up to May, there was still a lot of uncertainty in the market in the lead-up to the federal election, and property prices continued on their downward trend, albeit at a slower pace than in preceding months,” said Ms Mitchell. 

However, Maree Kilroy, economist at BIS Oxford Economics, expects upcoming data to reflect the spike in sentiment off the back of recent political and economic developments.

“The impact of the federal government’s income tax cuts and the Reserve Bank rate cuts will have a positive effect on lending demand from Q3 2019 onwards,” she said.

Ms Kilroy also expects a “cautious outlook” for inflation and wages growth to prompt a third adjustment from the RBA later in the year.

The ABS data also revealed that first home buyers (FHBs) increased their presence in the owner-occupied space, with their share of total commitments rising to 18.8 per cent in May, up from 18.2 per cent in April, and from 17.6 per cent in the same month last year.

According to senior economist at the Housing Industry Association, Geordan Murray, the rise in FHB activity also helped spark a 2.3 per cent rise in finance commitments for the construction of new homes.

“The credit squeeze that emerged from mid-2018 has seen lending for the construction of new homes contract sharply. This month’s data suggests that these conditions have started to ease,” he said.

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Big market of buyers push their way into popular property markets
Aerial shot of property
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