Stabilising House Prices, Increasing Lending Activities Seen To Steady Property Market

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Sydney Opera House
Sydney Opera House Solvarsity | Wikimedia Commons

The property market appears headed to a steady path following the significant slides of home prices in Sydney and Melbourne, Australia’s most lucrative real estate destinations. Buyers got wind of the downtrend and prompted them to borrow and go shopping for that first home.

First-time buyers have been encouraged by the dipping home prices in the two key cities, which according to Business Insider led to a slight jump in lending. In June 2019, more Australians have secured a loan for the purpose of financing their home buying sprees.

Citing the latest data provided by the Australian Bureau of Statistics (ABS), the same report indicated that borrowing improved by 1.3% at the end of June. The gain was welcome as it came in the aftermath of a slump, set by the ABS at 1.6%, recorded in May.

Economists have characterised the development as “a big turnaround,” considering the money was used to purchase properties.

The latter market, which has been ailing, needed another boost that was first provided by the recent loosening of lending standards. The friendlier economic policies were credited to the Coalition retaining government power.

It is expected that the trend will continue on to July. Per the same report, the lending figures last month, when released, is seen to stand on solid ground anew, indicating that more Australians have been emboldened to apply for loans since a more conducive setting is currently in effect.

It helped that the Reserve Bank of Australia (RBA) implemented rate cuts in the months of June and July.

However, market observers said property investors are unlikely to share the sentiments radiated by home buyers. At best, real estate investors will remain cautiously optimistic as they tend to hedge against the impact of a major retreat, as was witnessed by the property market in 2018.

These investors jumping right back to the market on the strength of current indicators is unlikely to happen anytime soon, experts said.

For now, the property market seems increasingly steadying, chiefly on the account of home buyers experiencing a notable bump, basing on the 2% growth in loans attributed to first-home buyers in the month of June.