RECENT PROPERTY MARKET NEWS
One of the most talked about issues related to property market in Australia these days is the interest rates especially after the Royal Commission into banking. There have been a lot of discussions how it would affect the wealth of homeowners in the country, especially after finding out that indeed, a lot of allegations concerning bank documents and other illegal financial activities were in fact, true. As a result, tighter credit and higher interest rates happened.
Here are some of the latest news about interest rates since then.
LONGEST HOUSING DOWNTURN
According to recent news, the longest housing downturn will be experienced in Australia, which homeowners should prepare for. Last Monday, figures were released that indicated that house prices fell for the 11th consecutive month. And over the next four years, there’s potential to slide for 12%. There’s also potential 15% drop in Sydney and Melbourne prices by 2020. It is also known to have an effect on non-food items spending, and because of the house price decrease, it will affect consumer spending. Now, economists are saying that decline in property prices will continue for years.
Some of the biggest mortgage lenders have recently offered discounts to new customers. This came after bank practices were regulated due to exposed wrong activities done by many banks in Australia. The discounts offered to new customers also come with 170 home loan products. ANZ reports that discounts on “its standard variable rate by 0.34 percentage points for new low-risk borrowers.” However, there’s a catch that could probably be bad news for many. Reports say that existing home loan customers are paying the price for these discounts. For instance, someone who took out a loan a year ago could be paying more compared to a new customer which a lot of customers deem unfair.
During the past year, property investor loaning experienced a 16% percent decrease, and as the credit tightens more, house prices and even building approvals will also be affected.
INTEREST RATES STABLE
For the month of September, there is no change when it comes to interest rates. The RBA board released reports after the meeting in Sydney that interest rates are left at 1.50%, which is a record low. The RBA governor said that this continuing record low will provide support to the Australian economy. However, it does not mean that it will not move anytime soon. So, what happens if it does? If the economy starts to weaken, the possibility is that other banks will follow Westpac’s decision to raise interest rates. RBA may also cut rates.
WESTPAC STOPS LENDING
Westpac just recently announced that lending to self-managed residential investors are no longer possible at this time. The second largest mortgage lender confirmed that it has put to a stop all home loan products, and so far, Westpac is the only major bank that offers this. This move is reportedly due to tightening of credit and changes in lending conditions due to the royal commission. Along with this, a spokesperson of the bank reiterated that, “We continually review our products and services to ensure they meet the requirements of our customers.”
FAVOURABLE CONDITIONS FOR FIRST-TIME HOMEBUYERS
According to Adelaide Bank, the quarter in June, loans for first-time buyers in Victoria, Melbourne have increased to 10.3%. Some suburbs that are looked at include Wyndham Vale, Norlane, Heidelberg West, and St. Albans. The market right now has softened and the clearance rates are down. More first-time buyers choose to buy now because the market is not at its peak, which means there is less competition.