'Some of the heat has come out of the market': REA

author-avatar By on May 14, 2021
'Some of the heat has come out of the market': REA

Australia's housing boom may be showing early signs of slowing down, with search activity dropping off and more homes coming onto the market.

That's according to the latest REA Insights Housing Market Indicators Report, which found rapidly rising house prices and the qualifying period for HomeBuilder ending are causing buyers to fade from the market, despite record low interest rates.

"While the Australian housing market remains undoubtedly strong, there are some signs that some of the heat has come out of the market," said realestate.com.au director of economic research Cameron Kusher.

"While low borrowing costs remain a strong lure for buyers in this market, an increasing number of buyers have now purchased, incentives have been removed from the market and price increases mean that housing has become less affordable.

"We don’t expect the market to come to a grinding halt, prices are expected to keep rising but we expect that the second half of this year will not see the market quite as strong as it has been over the first half."


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 26, 2021. View disclaimer.


The report, which analyses house hunting behaviours on realestate.com.au by over 12 million Aussies in real-time, found that while many of the metrics analysed remain at elevated levels compared to a year ago, they have eased back from their recent historic highs, pointing to a dampener on the recent buying frenzy.

Key metrics include search activity, email enquiries, views per listing, weekly sales of properties listed for sale, days on site of properties sold, filtered searches by price and by bedroom, and developer enquiries.

The report found email enquiries had fallen for the third successive month while views per listing had also dropped off.

"We expect that views per listing will continue to ease with a heightened volume of new stock coming to the market, sales volumes slowing somewhat and fewer overall buyers searching for properties," Mr Kusher said.

Investors come back into the market as first home buyers back out

The report also found that email enquiries from first home buyers continued to drift lower, accounting for 20.5% of all enquiries, while investor enquiries were up at 17.3% - the highest share since March 2020.

Compared to the same time last year, investor enquiry has seen the biggest increase, up 85.2% year-on-year. 

Meanwhile, first home buyer enquiry volumes were only up 0.7% year-on-year, which Mr Kusher says is a sign of things to come.

"With HomeBuilder having now ended it seems likely that first home buyer enquiry will continue to soften while tight rental market conditions and attractive yields and capital growth potential will likely lead to an ongoing uplift in enquiry coming from the investor segment of the market," he said. 

Recent data shows new home sales halved nationally in April, a month after the March deadline for buyers to sign contracts for HomeBuilder.

Housing Industry of Australia (HIA) data shows that new home sales fell in April to be 54.4% lower than March.

“This sales result for April 2021 is an encouragingly strong result. It suggests that there is a significant volume of new homes to be built for customers not eligible for HomeBuilder,” said HIA economist Angela Lillicrap.

“There is an unprecedented volume of building starts set to occur in 2021. HomeBuilder and lower interest rates have facilitated a surge in demand for detached homes that ensures a record number of new detached homes will be built this year and into 2022.

“A cooling in sales is to be expected as the grants available through the HomeBuilder program came to an end in March."

Budget papers reveal housing boom "not expected to be sustained" 

This year's federal budget papers reveal new housing construction is tipped to stall and for demand for apartments to drop off.

"The near-term outlook for housing activity has strengthened considerably, supported by an elevated pipeline of construction work and rising house prices," the budget papers read.

"However, the policy-driven strength in demand for detached house construction partly reflects a bring-forward in demand from future years and activity is expected to moderate as the current pipeline of work is completed.

"As the outlook for elevated levels of detached house construction unwinds, slower population growth is also expected to limit demand for higher-density dwellings in coming years, such that the recent strength in housing market activity is not expected to be sustained."

The demand for new apartment construction is also tipped to drop off post-pandemic.

"It is not yet clear what structural changes will result from the pandemic, particularly given the greater propensity to work from home during the pandemic.

"Changing preferences for more outer-city, spacious and detached housing may also limit growth in apartment construction in coming years."

What was in the budget for housing affordability? 

Housing was a major component of the 2021-22 Budget, as $2 billion worth of investment was included for the following support measures:

  • Expanding the First Home Loan Deposit Scheme (now called the New Home Guarantee) with an additional 10,000 places in 2021/22 for first home buyers building or buying a newly-built home;
  • Increasing the amount of voluntary superannuation contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000;
  • Over four financial years, 10,000 spots will be made available for single parents with dependent children to purchase a new or existing home with as little as 2% deposit (avoiding LMI) under the Family Home Guarantee from 1 July 2021;
  • Extending the six month construction commencement period for HomeBuilder to 18 months for all existing applicants into 2022. 
  • Adding an extra $124.7 million in funding for states and territories to bolster public housing stocks

In his Budget Reply last night, Labor Leader Anthony Albanese vowed to tackle housing affordability issues through a $10 billion 'Housing Australia Future Fund'.

This fund would see around 20,000 social housing properties built in the first five years, and Mr Albanese said these plans "will create over 21,500 jobs each year". 


Photo by Pat Whelen on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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