Three other figures impacting the housing market


There’s a lot going on in the real estate market right now, and you’d be forgiven for thinking the news was only about house prices.

The dips in values ​​are a big story, of course, with values ​​falling from August in all but seven CoreLogic tracks across all 41 regions.

But there are several other economic indicators that reveal what is happening with property.

Rising interest rates weigh on households

The Reserve Bank has raised the official interest rate since May, with the latest 0.5% increase taking the official rate to 2.35%.

The latest increases mean a mortgage owner who bought at the current Australian regional median price of $623,011 could be up for an additional $150 a month in repayments, according to analysis by comparison website Canstar.

Dr Paul Mazzola, senior lecturer in banking and finance at the University of Wollongong’s School of Business, said predicting when the RBA would stop raising rates was a “guessing game”.

“That’s the big question that no one can answer. And the reason is that it takes several months before the impact of rising rates trickles down to the economy. We have yet to feel the impact on spending from the increases from May to August,” he said.

Dr Mazzola said rising rates would likely lead to more mortgage defaults, with low-income people hit hardest.

“Yes, naturally there will be more faults – the big question is to what extent these faults will occur. It’s a bit difficult to predict at this stage.

“Banks said they weren’t too concerned about the rate of defaults – banks normally expect defaults in any given year. So I think we just have to wait and watch closely. But I expect an increase in defaults, especially in low socio-economic areas,” he said.

Mortgage is down

Fewer people are looking for new mortgages, with home loans falling since the Reserve Bank of Australia began raising the cash rate in May.

The drop in new loans was felt by several different groups of borrowers, including first-time home buyers and investors, according to the latest Australian Bureau of Statistics figures released in July.

“The value of loans to investors fell 11.2% to its weakest month in more than a year. This was followed by a 9.5% drop for first-time home buyers, to their lowest level in more than two years, and a 6.3% drop for other homeowners. There was also a 3.3% decline in loans for renovations,” said Tom Devitt, an economist with the Housing Industry Association.

“Loans for building or buying new homes fell 4.0% in July, underscoring the impact of recent increases in the RBA’s cash rate,” he added.

Migration to the regions is moderating

The pace of migration to the regions from capitals has slowed since peaking amid the COVID-19 pandemic, indicating that demand for regional properties has passed its peak.

The number of people moving from capital cities to the regions fell 16.5% in the June quarter, according to the latest release of the Regional Australia Institute‘s Regional Movers Index.

At the same time, the proportion of regional residents moving to a capital has returned to pre-pandemic levels.

“The resumption of these outflows, combined with the reduction in inflows to the regions, has led to a drop in net migration to the regions. Net migration to the regions in the June quarter of 2022 fell significantly, down 35.1%, or 41.1% less than a year earlier,” says the latest Movers Index report. regional.

Commonwealth Bank Regional and Agribusiness executive managing director Paul Fowler said that although the number of people moving to the regions had fallen, demand for housing still exceeded supply.

“In Geelong [for example] there are ten times more jobs than houses,” he said.



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