Property hot spots, Sydney and Melbourne, appear to have reached a turning point, with house price increases slowing in both major centres and auction clearance rates dropping significantly. Could this be your chance to pick up a property bargain before Christmas?
APRA slowing lending
APRA's actions aimed at slowing banks’ lending to property investors appear to be working as the number of investors borrowing has dropped significantly over the last quarter, improving access to finance for first home buyers.
Earlier this year, The Australian Prudential and Regulation Authority (APRA) announced it would set in place additional supervisory measures that included limiting interest-only lending, typically the preferred lending option for investors, setting limits to the amount of high LVR lending banks can do, and restricting lending to investors to below the benchmark of 10 per cent.
House prices in Sydney and Melbourne have been growing at low double-digit annual rates over the past five years, but during the past six months Sydney prices have fallen one per cent while Melbourne price growth has slowed to a seven per cent annual rate.
HSBC’s chief economist for Australia, Paul Bloxham says the slowdown in Sydney and Melbourne has been driven by increased supply, higher lending rates for investors and a retreat in foreign demand.
“We expect these factors to continue to weigh on housing price growth in the coming quarters and retain our forecast that national housing price growth will slow from the double-digit rates of recent years to three to six per cent in 2018,” he said.
A bargain this Christmas
With all the signs pointing to a shift in the market in favour of buyers in both Sydney and Melbourne, and potentially other regions in Australia too, this could be the opportunity you’ve been waiting for.
Generally, fewer properties are listed in December and January, and the number of buyers tends to drop off too with people away on holidays. So, it’s worthwhile keeping an eye on the market and even putting in an offer on a property you’re interested in that may only be going to auction after the holiday season.
If you need help getting pre-approval so you know how much you have to spend, talk to a Mortgage Express broker who can help you secure the best deal possible.
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