The State of the Housing Market Summer 2019

This year has delivered some major windfalls for the property market in terms of government policy, lending regulation and first home buyer stimulus.

While the results of these factors are just beginning to trickle through, there’s a definite air of positivity and optimism when it comes to sales, auctions and the real estate industry in general.

So, what are the major factors driving change, and what effects have they had to date?

The Federal Election

The lead-up to this year’s Federal Election brought incredible uncertainty to the property market, with the Labor party’s talk of overhauling negative gearing seeing investors highly wary about purchasing.

That also had a knock-on effect, with many vendors reluctant to take their home to market, while owner-occupiers also waited to see what would happen next

In any election year, the market does tend to slow in the weeks prior to polling day as voters weigh the pro’s and cons of what may come to pass, but this one was particularly challenging.

Fortunately, this year’s election result brought renewed confidence and even immediately after there was a pick-up in market activity.

APRA Lending Regulation

Hot on the heels of the election came news the Australian Prudential Lending Authority (APRA) had relaxed the seven per cent lending floor and two per cent stress test buffer.

Basically, that freed the banks to set their own minimum interest rate floor for use in serviceability assessments, using a recommended interest rate buffer of 2.5 per cent.

For home buyers this enabled many to access extra funds, allowing them to go for greater loans, and again it brought additional confidence in the market.

Lending Challenges Remain

Despite the APRA relaxation, lending challenges still remain. With the introduction of comprehensive credit reporting, many prospective buyers are finding finance isn’t guaranteed and they need to get their loan ducks in a row earlier in the purchasing journey.  

In a nutshell, the banks are taking a much closer look at credit history and discretionary spending, so buyers need to be much more careful about what’s on their report before seeking a loan.

The First Home Buyers Deposit Scheme   

More recently the First Home Buyers Deposit Scheme passed through the senate, with the initiative slated to commence from January 1, 2020.

The scheme provides a guarantee allowing 10,000 eligible first-home buyers on low and middle incomes to purchase a home with a deposit of as little as 5 per cent.

Although welcome news, Domain notes there are on average 100,000 first home buyers a year, and the results of this incentive are yet to be seen.

Market Sentiment

Together all these factors have resulted in renewed confidence in the housing market, with the initial results of an upswing beginning to now trickle through.

The following recent statistics indicate where the market’s at:

  •  Home buying intentions holding at the high end of the range after entering negative territory in the first half of the year – CommBank
  • National value of housing up by a cumulative 1.7% since the market found a floor in May 2019 CoreLogic
  • September month on month housing value lift of 0.9% (the largest monthly lift since March 2017) CoreLogic
  • Spring auction preliminary and final clearance rates tracking at about 20 per cent higher than this time last year (preliminary rate averaging over 70 per cent nationally) CoreLogic  
  • In seasonally adjusted terms, lending commitments to households rose 3.2% in August 2019, following a 4.3% rise in July (ABS)
  • In trend terms, new lending commitments rose for owner occupier dwellings excluding refinancing (up 1.5%) and for investment dwellings excluding refinancing (up 1.6%) in August 2019 (ABS)
  • The number of lending commitments to owner-occupier first home buyers rose 5.2%, while the number of lending commitments to non-first home buyers fell 0.7% in seasonally adjusted terms (ABS)


For more key data on the housing market and industry insights see the Eview blog