New home sales on the rise
April 01, 2009
There has been some positive data on the residential property market in Australia, despite the economic downturn.
The Housing Industry Association said sales of new homes rose for a second straight month in February thanks to lower interest rates and government grants to first home buyers.
Federal Housing Minister Tanya Plibersek said 42,000 people have applied for the first home buyers grant since it was boosted in October last year.
Analysts at Macquarie Private Wealth are of the view that rising housing lending data, improved auction clearance rates and a surge in first home buyer activity are pointing to a recovery in the housing market which is developing well ahead of most other countries.
Dr Matthew Hardman, the Head of Research at property firm Rismark said that while there are hints of a recovery it doesn't mean we're seeing the start of an upswing.
'The only thing that you can say for certain is that the high volatility in all the asset classes is going to continue for quite a while, at least until late this year,' Dr Hardman said.
He believes that it is hard to gauge the actual effect of the first home buyer grant.
'The lower to medium value properties will be stable for a while because the lower interest rates are creating more demand there,' Dr Hardman said.
In the higher value areas, you know you've got an oversupply and in the $2 million dollar range they're plummeting 20 to 25 per cent because a lot of people need to sell but how many people want to pay that.'
Paul Ryan, the Managing Director of Opportune Home Loans, said he is seeing a lot of interest from first home buyers and they need to be aware of the banks' lending criteria which is changing daily.
'It's probably harder to get a home loan now than what it has been for the past ten years. For the past 8 or 9 years, we've seen a 100 per cent home loan where people were able to borrow as much as the purchase price of the property,' Mr Ryan said.
'There isn't a lender out there now that will do that. Just in the past couple of weeks, lenders have dropped it to 95 per cent. Commonwealth Bank on Monday dropped it back to 90 per cent.'
Paul Ryan from Opportune said the lenders want to de-risk themselves, which he does not believe is such a bad thing.
'An applicant now needs to show genuine savings or a proven savings record or have equity in their property if they want to upgrade now so lenders are definitely de-risking in that regard,' Mr Ryan said.
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