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Property market Update – October 2021

OCTOBER RBA UPDATE: CASH RATE | 0.1%

RBA unwavering on monetary targets 

Following the RBA’s release of minutes from its monetary policy meeting last week, they have reiterated that the cash rate would not rise until actual inflation is sustainably within the 2-3% target range, which would not be met before 2024. As housing prices and credit growth continue to rise strongly in an environment of historically low-interest rates (with strong demand for credit by both owner-occupiers and investors), board members continued to emphasise the importance of maintaining lending standards and serviceability buffers where appropriate.

What impact will the proposed APRA assessment rate changes have on your borrowing capacity?

APRA announced that lenders will now need to stress test the proposed repayments of a new loan at the “actual rate the borrower pays” + 3%, which is an increase of 0.50% from the current 2.50% buffer. These changes are expected to be effective by the end of this month.

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For potential buyers who have an existing pre-approval in place, they will be honoured from the approval date + 90 days. After 90 days, new servicing calculators will apply with a higher assessment rate. Get in touch if you have any questions or would like to discuss how these changes may affect you.

 

Australia records its 2nd busiest auction week in 2021 

According to CoreLogic Australia, last weekend’s preliminary clearance rates have remained over 80% nationwide, with 3,033 homes going under the hammer. That number is more than double what we saw at the same time last year with the most impressive statistics standing in Melbourne, which had an astonishing 1,474 auctions held last weekend, compared with only 490 last year. These numbers indicate the state’s remarkable recovery so far after almost 9 months of lockdown since the pandemic began.

Sydney followed behind with almost 950 homes at auction last weekend, with the highest numbers in the suburbs of Eastern Suburbs, North Sydney & Hornsby. Sydney auction volumes are set to increase week-on-week as auction numbers follow a trend of growth.

Next week is set to be an even bigger auction week… with early numbers suggesting more than 3,600 auctions are scheduled to be held.

The new property market hotspot: Brisbane

Brisbane has reached new record highs amid the pandemic, as the Queensland state recorded more property sales than Victoria and New South Wales over the September quarter. The volume of house sales is up by 10% YoY across Greater Brisbane. The latest data provided by Place Advisory also showed that interstate investor purchases of houses in Brisbane have surged by 148% since the COVID-19 outbreak in 2020.

Rising affordability constraints in other capital cities, ongoing lockdowns, and a shift in lifestyle choices are all factors in Queensland’s appeal to buyers.

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Please contact your dedicated broker to see how we can help.
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