ACT loans drop 17.1 per cent over the first three months of 2018

The number of home loans in the ACT fell 17.1 per cent over the first three months of 2018, according to a new report.

The Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report found the number of loans in the ACT was 2295 in the March 2018 quarter, down from 2767 in the December 2017 quarter.

ACT was not alone, this trend was recorded nationwide. Every state and territory experienced a quarterly drop in the number of loans, with NSW having the greatest decline at 17.9 per cent.

“While some decline in the number of loans for this period can be expected due to the summer holiday break, the reduction reflects a changing sentiment in the market,”  REIA president Malcolm Gunning said.

Despite the ACT’s quarterly drop, it had the highest annual increase in the number of new loans at 7.1 per cent.

First home buyer loans in the ACT also declined over the quarter by 10.2 per cent, but there has been an annual increase of 80.6 per cent.

ACT recorded both the lowest proportion of family income to meet loan repayments and rent payments in the nation, at 19.7 per cent and 18.5 per cent respectively. However, this decreased slightly over the quarter.

• Related: ACT market remains strong, PRDnationwide report 
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• Related: Number of rentals in Canberra significantly declining 

Interestingly, there’s only a 1.2 per cent difference between the proportion of income needed to meet home loan repayments and that needed to meet rental repayments.

“When you look at those figures, it doesn’t take into consideration the deposit which is the hardest part,”  Mr Gunning said. It was an ideal time for first home buyers to enter the market.

“With interest rates the way they are and the fact rental affordability has slightly declined for a potential first home buyer, there isn’t a better time to get into the market,” he said.

When asked if the stamp duty abolition for first home buyers in the ACT – which does not come into effect until July 2019 – will halt first home buyer loans over the next 12 months, Mr Gunning said they need to take a number of factors into consideration before deciding to delay a purchase.

“The abolishment of stamp duty is a great incentive but it really creates more competition in the market and consequently drives up the price,” he said.

“I think stamp duty is a secondary consideration, the primary consideration is the asking price.”