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Victoria leads the property market as NSW lags behind

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Throwing off worries about high household debt, new data reveals Victoria has emerged as the state with the highest growth in property settlements since last quarter, according to one of Australia’s largest mortgage broking groups.

The findings come from leading comparison website comparethemarket.com.au which, in partnership with mortgage broking services group AFG, features numerous products from over 30 of Australia’s most reputable lenders.

Comparethemarket.com.au analysed AFG’s September Quarter Mortgage Index and found that Victorians are streets ahead of the other states in terms of total funds settled in residential property transactions through AFG across the first quarter of the 2018 financial year.

Comparethemarket.com.au’s analysis shows there was an 11 per cent rise between the fourth quarter of the last financial year and the first quarter of the current financial year in total funds settled in property transactions in Victoria through AFG. Year-on-year this figure is even more impressive at 17 per cent.

Compare this to NSW, which only recorded a 1 per cent increase in funds settled in property transactions across the same period. Year-on-year, NSW recorded a 4 per cent decline in total funds settled in property transactions.

It’s also worth calling out the Northern Territory’s result, with total AFG funds settled in property transactions between the fourth quarter of the last financial year and the first quarter of the current financial year rising from $64 million to $83 million.

As might be expected, total funds settled in real estate transactions in the mining states of Western Australia and Queensland remain depressed, albeit with a slight improvement compared to the previous quarter.

In WA, there was a 3 per cent decline in the volume of funds settled between the fourth quarter of the previous financial year and the first quarter of this financial year. This is a substantial improvement on the year-on-year result, which sits at -19 per cent.

In Queensland, between the end of the previous financial year and the first quarter of the current one, there was a 2 per cent decline in the volume of funds settled through AFG. This is still an improvement year-on-year with transaction figures sitting at -8 per cent.

Comparethemarket.com.au spokesperson Abigail Koch said: “The property market is facing a fork in the road, ahead of rising interest rates and in response to a bull run in real estate, as borrowers and lenders respond to tighter lending rules. Existing and prospective property owners need to do their homework as Sydney’s property market is plateauing after recent highs, while other markets like Melbourne are improving, which will produce plenty of good buying opportunities, but also risks in some markets.”

Overall, there has been a jump in AFG’s home loan volumes from $14.5 billion to $15.1 billion since last quarter.

Nevertheless, new prudential standards that restrict the percentage of loans banks can issue to lenders taking out interest-only loans are affecting the property market. According to the new research, investor loans are at the lowest since the first quarter of FY2013 at just 29 per cent of all transactions settled last quarter.

Interestingly, the number of borrowers refinancing loans has dropped from 29 per cent of AFG loans processed, to 25 per cent this quarter.

But more borrowers are turning to non-bank lenders, with this part of the market making up 35.6 per cent of all of AFG’s transactions, up from 35.2 per cent last quarter.

On top of this, the number of introductory loans has risen from 2.3 per cent to 2.5 per cent of the market.

“With interest rates on the rise in other markets such as the US and Canada, this is an indication that it’s only a matter of time until rates rise in Australia. Property investors need to consider how rate rises will affect their loan repayments and plan accordingly so there are no nasty surprises when their mortgage repayments go up. We encourage home buyers to shop around for home loan products on comparison websites such as comparethemarket.com.au to ensure they get the best loan for their circumstances,” says Abigail.

 

Total funds settled in property transactions

AFG Quarter Mortgage Index: Growth in total lodgement value
Fiscal quarter National
($ millions)
NSW
($ millions)
QLD
($ millions)
SA
($ millions)
VIC
($ millions)
WA
($ millions)
FY2017 Q1 $15,136 $5,476 $2,589 $800 $4,229 $1,934
FY2017 Q4 $14,578 $5,243 $2,431 $770 $4,456 $1,613
FY2018 Q1 $15,008 $5,273 $2,388 $768 $4,930 $1,567
FY2017 Q4 compared with FY2018 Q1 3% 1% -2% 0% 11% -3%
FY2017 Q1 compared with FY2018 Q1 -1% -4% -8% -4% 17% -19%
AFG Quarter Mortgage Index: Growth in total lodgement value
Fiscal quarter National NSW QLD SA VIC WA
FY2017 Q1 $15,136,246,232 $5,476,418,504 $2,589,198,923 $800,973,066 $4,229,206,771 $1,934,567,868
FY2017 Q4 $14,577,771,212 $5,242,888,001 $2,431,200,758 $770,160,327 $4,455,905,151 $1,613,481,490
FY2018 Q1 $15,008,474,745 $5,272,599,522 $2,387,940,230 $768,174,174 $4,929,546,395 $1,567,112,531
FY2017 Q4 compared with FY2018 Q1 3% 1% -2% 0% 11% -3%
FY2017 Q1 compared with FY2018 Q1 -1% -4% -8% -4% 17% -19%

Average mortgage size

AFG Quarter Mortgage Index: Growth in average mortgage size in dollars
Fiscal quarter National NSW QLD SA VIC WA
FY2017 Q1 $479,101 $596,950 $399,876 $378,711 $459,048 $444,014
FY2017 Q4 $484,295 $595,106 $408,537 $377,160 $473,629 $432,569
FY2018 Q1 $491,952 $598,547 $413,281 $390,531 $483,099 $442,437
FY2017 Q4 compared with FY2018 Q1 2% 1% 1% 4% 2% 2%
FY2017 Q1 compared with FY2018 Q1 3% 0% 3% 3% 5% 0%

Loan value ratios as percentage of the property value

AFG Quarter Mortgage Index: Growth in loan value ratios (loan stated as % of property value)
Fiscal quarter National NSW QLD SA VIC WA
FY2017 Q1 69.50% 66.20% 69.90% 70.50% 70.90% 71.50%
FY2017 Q4 67.70% 63.60% 68.00% 70.20% 70.70% 69.70%
FY2018 Q1 68.30% 64.10% 68.40% 68.80% 70.50% 72.00%
FY2017 Q4 compared with FY2018 Q1 1% 1% 1% -2% 0% 3%
FY2017 Q1 compared with FY2018 Q1 -2% -3% -2% -2% -1% 1%

 

For interviews and more information, please contact:

Neneh McGuire | +61 2 9279 3330 | +61 404 433 263| e: nmcguire@theideassuite.com.au 

 

About comparethemarket.com.au

Comparethemarket.com.au is an online comparison service that takes the hard work out of shopping around. We help Australians to quickly and easily compare and buy products from a wide range of providers. Our easy-to-use comparison tool enables consumers to find a product that best suits their needs and their back pocket. We’re also in the business of comparing personal finance products, utilities and can help find the lowest fuel prices in your area. Whether it’s car, health or home & contents insurance, we provide a completely free service, that empowers Australians to make buying decisions with greater trust, knowledge and savings. We’ve got your back, simples.

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