Buyers becoming more confident

By Gerv Tacadena | 08 Oct 2020

It seems that now is a good time for buyers to participate in the housing market, as conditions continue to remain in their favour, said an expert at CoreLogic.

The low setting for interest rates is one of the key factors supporting housing market activity amid the impacts of the COVID-19 pandemic, said Tim Lawless, head of research at CoreLogic.

"With owner-occupier mortgage rates for new loan originations typically between 2% and 3%, housing finance commitments have surged, and CoreLogic’s estimate of home sales over the September quarter is tracking slightly higher than a year ago," he said.

Lawless said the likelihood of mortgage rates remaining low or reducing even further makes home buyers more confident in making high-commitment purchasing decision such as getting a property.

Furthermore, the federal and state governments' support in the form of housing grants and tax discounts is also crucial in encouraging more buyers in the market, Lawless said.

"Government incentives, such as the First Home Loan Deposit Scheme, the First Home Buyers' Grant, and the HomeBuilder grant, along with state-based incentives such as stamp duty discounts, have supported greater levels of participation from first home buyers, while existing mortgage holders have been shopping around for the best mortgage rates fuelling a surge in refinancing," he said.

The federal government's Budget 2020 also laid out additional plans to support activity in the residential market as Australia recovers from the impacts of the COVID-19 pandemic. These plans include the expansion of the deposit scheme, income tax cuts, and investment on regional infrastructure.

In a recent analysis, Terry Ryder, founder of Hotspotting, said first-home buyers are having a “feeding frenzy” across housing markets in Australia.

“They comprise the most active cohort in the housing market. This is showing up in the lending figures, in the sales data, and in anecdotal evidence from people at the coal-face of markets across the nation,” he said.

The latest figures from the Australian Bureau of Statistics show that loan commitments from first-home buyers grew by 14.4% in July. They accounted for a third of all owner-occupier commitments.

"Investors are largely dormant so first-timers are not having to compete with investors as much as before. You can borrow cheap from banks who want your business, you can pocket incentives from federal and state governments, and get into your first home with an ease that has never existed before," Ryder said.

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