'Now's the time to buy': Demand for lending bounces back as market recovers

Buyers are being urged to make the most of Sydney and Melbourne’s property prices, with the latest ABS figures showing a strong uptick in new lending.

Data from the Australian Bureau of Statistics released on Monday showed total lending to Australian households for dwelling purchases (those excluding refinancing) rose 5.1 per cent over the month of July – the highest month-on-month jump in over five years.

The last time mortgage lending grew by that much was in September 2013, which was also around the time when Sydney and Melbourne property prices began a strong upward momentum, said Domain research analyst Eliza Owen.

“As we expected, the finance space is back,” Ms Owen said. “What these lending figures show us is how much the finance space has changed off the back of the re-election of a Coalition government, and successive cash rate cuts.”

The strong increase in home loans was the strongest leading indicator yet that a recovery was underway, said Maree Kilroy, economist for BIS Oxford Economics.

“The appetite for residential property has increased, which is what we expected,” she said. “We’ve had all these changes that were designed to encourage housing demand, and they have.

“The churn has been initiated … these changes don’t work in isolation, they work together, so that’s why we’re seeing the lending numbers have increased so strongly.”

Real estate agents across the capital cities reported buyers were back in the market literally the day after the federal election result in May and Olivia Chung of McGrath Lower North Shore-Neutral Bay said the lending figures were concrete evidence of that.

She described the market as sitting in a “sweet spot”.

“The buyers are feeling a lot more confident, my sellers are very realistic and listening to buyer feedback and, because of that, everyone is a bit more level-headed at the moment,” she said.

“The market is the best I’ve seen it in two years – that’s reflected in the numbers at open houses and the contracts we’re getting – and so I think this is a time where buyers really need to capitalise on that.”

Miriam Sandkuhler, chief executive and buyers’ advocate at Property Mavens, said property buyers should note that investors and home buyers were back in the market “in a big way”.

“We are going to see some strong auction results ahead of us. Short supply of good quality and affordable stock could result in a mini boom if more vendors sit tight and watch the market, rather than list their properties for sale,” she said. 

“Now is the time to buy if you know how to correctly appraise the value of property and have a well-considered buying or bidding strategy in place.”

Keiran Whaley, director at Jellis Craig Ivanhoe, said the property market was at an “interesting point” right now, where buyers still had time to snag themselves a good deal before the full effects of the interest rate cuts and federal election result took hold.

“Certainly I would say those lending figures reflect what we’re seeing on the ground,” he said.

“The buyers are there. The number of bidders at auctions has increased. Auction clearance rates have increased. The ease in which we’re selling properties has shifted significantly. 

“From a buyer’s perspective, there is no better time to buy, because prices are still 10 to 15 per cent off their peak.

“The bounce back has been amazing and I’d say very similar to what happened after the GFC, in that it [the market] was off one week, and on the next.

“If we get the listings coming into the spring selling season, things could definitely pick up substantially.”