Why Is The Property Market Slowing Down?
Australian property has been through a decent amount of peaks and troughs over recent months, with the latest figures showing a slowdown across the market. As we go past the halfway point in the year, analysts are keen to see what has caused this trend.
So, is now a good time to think about buying a house, or would renting an apartment in Sydney make more sense? We take a look at some of the issues arising right now.
Owner-occupier lending is down
There’s been a fall in the number of home loans granted to owner occupiers, which came to a head in May. The Australian Bureau of Statistics revealed that compared to a month earlier, approvals were down 0.6 per cent in trend terms, while lending to investors was up 3.9 per cent.
Australians have faced their fair share of pressures over the past few weeks.
A number of factors could be at play here. Firstly, the Reserve Bank of Australia’s latest cash rate reduction didn’t take effect until May, which may mean that its effect on lending is still yet to manifest itself.
Not only this, investors are still proving to be keen to snap up Sydney property. There’s plenty of debate over whether this is at the expense of first-time buyers, but these latest figures do help put the situation into perspective.
Consumer confidence hits the rocks
Australians have faced their fair share of pressures over the past few weeks, which has taken its toll on consumer confidence data. The ANZ-Roy Morgan Australian Consumer Confidence Index for the week to July 12 shows that sentiment declined for the third week in a row, reaching a reading of 115.2.
“Confidence has been buffeted by uncertainty surrounding the domestic political outlook, as well as concerns over global growth,” indicated ANZ’s Head of Australian Economics Felicity Emmett.
“The downgrade of Australia’s credit rating outlook by S&P is also likely to have weighed on consumer sentiment.”
Not knowing what’s around the corner
This decline in confidence will understandably have an impact on real estate. If people aren’t optimistic about what the future holds, they’ll hold off making major purchases such as buying property in Sydney – and the entire market will suffer.
The Real Estate Institute of Australia explained that the proportion of first-time buyers needs to pick up pace in the near future if the market is to start balancing out. How soon this will happen is anyone’s guess, but all eyes will be on the sector to see what happens.