Powered by MOMENTUM MEDIA
subscribe to our newsletter

Housing market ‘green shoots’ beginning to emerge

The housing market is showing signs of recovery, but a “V-shaped” reversal from the current trend is unlikely, according to a new analysis from ANZ Research.

ANZ Research economists Felicity Emmett and Adelaide Timbrell have identified “green shoots” in the housing market, with property price falls beginning to “moderate” and buyer sentiment on the rise.

Drawing on the latest data from property research group CoreLogic, the analysts noted that they expect a further 5 per cent fall in national home values in 2019 – taking the cumulative peak-to-trough decline to 15 per cent – before stabilising in 2020.

“Price declines in Melbourne and Sydney are already starting to moderate, suggesting we are most likely past the worst of the housing downturn,” the ANZ Research economists stated.  

The analysts also referenced the latest consumer sentiment data form the Westpac-Melbourne Institute, which reported an uptick in sentiment regarding the “time to buy a dwelling”, which increased by 13.6 per cent from 101.1 index points in May 2018 to 114.9 in May 2019.  

Advertisement
Advertisement

“This likely reflects the improvement in affordability brought about by price declines,” the analysts added.

The rise in first home buyer (FHB) activity was also cited, with FHB market share increasing from 15.3 as at 31 March 2018 to 18 per cent in the month ending 31 March 2019, according to the latest data from the Australian Bureau of Statistics.

“Better deposit affordability as a result of falling prices, along with improvements in sentiment, is encouraging first home buyers to enter the market,” the analysts continued.

“The number of years needed to save for a deposit for a Sydney home (on median incomes and prices) has fallen from 10.6 to 9.2 and stamp duty concessions in New South Wales and Victoria have also encouraged first home buying.”

Further, the analysts claimed that while it is “taking longer on average” to sell homes, most households are “coping well with the downturn”.

PROMOTED CONTENT


“While household debt has reached 190 per cent of household disposable income across the economy, serviceability of mortgages is not a problem for most,” ANZ Research stated.

“There are some signs of increased stress on home owners moving from interest-only loans to principal and interest loans, and default rates for these borrowers have moved a little higher from a very low base in recent months.  

“However, there are no signs of forced selling, with the number of new listings continuing to fall.”

However, the ANZ Research analysts concluded by noting that while improving affordability would be an “important ingredient in turning around the current cycle”, the upturn would not be as pronounced as the fall that preceded it.

“If prices fall in line with ANZ Research’s expectations and the economy remains in good shape, demand and sentiment should turn around,” the analysts stated.

“We are unlikely, however, to see a V-shaped recovery.”

[Related: Housing market may have ‘moved through the worst’]

Housing market ‘green shoots’ beginning to emerge
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Home ownership costs jumped by 130 per cent over two generations, with Gen X spending a quarter of their income servicing their loan, accord...

Fintech lender Tic:Toc has secured $25 billion of additional funding for the next seven years, after extending a partnership with Bendigo an...

The non-bank lender has closed its first RMBS deal under the Bluestone Prime program, worth $700 million. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.