According to the most recent ABS figures, first home buyers are taking out more loans to get into the property market.
In August 2016, the number of approved loans exceeded 1,800, representing a rise of 14% compared to July. This was also the highest monthly total recorded for the year to date. In conjunction with the increased lending activity, the average value of a first home buyer loan jumped by 2.6% to $305,000, which is the highest value recorded by ABS.
The boost in first home buyer activity may be attributed to the $20,000 increase in the First Home Owner Grant for new housing, an amount that was lifted from $15,000 in mid-2016. This has led to an upswing in building approvals and has in turn enhanced the local economy.
Economist Andrew Wilson from the Domain Group adds that low interest rates have also accounted for the increased interest of buyers in Brisbane.
“With prices down in Brisbane this quarter, it’s prime time for buyers who have been waiting for a more affordable market to search for their dream home,” he says.
Metro prices dip
Brisbane reported annual growth of 3.2%, which is one of the strongest performances among the capitals.
However, house prices in the metro fell by 0.9%, while unit prices slipped by 2.9% over the September 2016 quarter – the lowest they have been since December 2012.
“A mixed economic performance and fragile buyer and seller confidence has encouraged a modest fall in Brisbane prices this quarter,” Wilson states.
“But a resumption in price growth is likely over the remainder of the year with increasing investor and first home buyer activity. If you’re a house hunter or investor, Brisbane’s market shows great opportunity for you. A fresh supply of newly built properties in the city means that you’re in the right market for a wide variety of choice and units that are easier on the hip pocket than neighbouring East Coast capitals.”
Nonetheless, Scott O’Neill, director of Rethink Investing, continues to be concerned about oversupply.
“Some investors, who are yet to settle on these off-the-plan properties, will now find there are tougher lending conditions applied to their units,” he explains.
“Numerous off-the-plan buyers will fail to complete their sale as a result of not being able to supply the additional cash required for settlement. The oversupply issue will continue to rise well into years 2017 and 2018. This is a bleak outlook for developers, banks and homeowners involved in these units as it could take many years for the oversupply to be completely absorbed.”
With the completion of properties approved for building in a few years’ time, vacancy rates are expected to rise further, stunting rental growth even though yields in Brisbane are higher than in the other capital cities.
Furthermore, though Brisbane is cheaper than Sydney and Melbourne, the limited employment options are a factor that could discourage buyers.
Regional market oversupply
The same oversupply issue that has the potential to impact on Brisbane is plaguing regional Queensland, which already has a high dwelling supply.
To address this problem, the Real Estate Institute of Queensland (REIQ) is calling for the extension of the First Home Owner Grant to established housing.
“Areas in regional Queensland, such as South Mackay and Blacks Beach, have lost 30% off the value of property over five years,” says Antonia Mercorella, CEO of REIQ.
“These markets have a surplus of housing, established homes, and there is no need to build more housing. Let’s simply broaden the grant to include established homes. Let’s help them get into the market with a $20,000 grant and help the residential property market at the same time.”
SUBURB TO WATCH
Sunnybank: Asian haven a mixed market
Sunnybank is the residential choice for many Asians at present, and it shows in the suburb’s amenities and industrial scene.
The community centre of Market Square serves the Asian population with a variety of Asian shops and restaurants. There are also many schools catering to families. This community spirit is one of the factors that have inspired Sunnybank’s growth, and the median house price has soared by 5% over the past 12 months. While unit prices fell slightly in the same period, average returns are high at 5.3%, which could attract investors.
This thriving suburb also has several shopping centres housing supermarkets and cinemas, such as Sunnybank Plaza and Sunny Park. Sunnybank Plaza includes the local bus station.
There are also three railway stations with services heading north of the suburb to Brisbane and south to Beenleigh. Nonetheless, traffic can be an issue in this busy suburb, especially during peak hours.
