Queensland leads way as house buyer confidence surges

The new data shows that there has been an increase in loan commitments for all buyer groups in Australia, and Queensland is the state at the top of the tree in most cases.

Crunching the numbers

New loan commitments for properties classed as owner-occupier rose by 12.6 per cent in August 2020 compared to the previous month, according to the ABS. Furthermore, year on year figures show a 19.3 per cent. While these increases were witnessed across the country, aside from the Northern Territory, the biggest increases were seen in Queensland, Victoria, and New South Wales.

The Courier Mail's Lisa Hughes got the inside track on the research and spoke to the president of the Real Estate Institute of Australia, Adrian Kelly. In case you were puzzled by the statistics because of the lockdown restrictions imposed, Mr Kelly said that the figures for August actually reflect earlier consumer demand.

Mr Kelly explained to the newspaper: “The ABS points out that commitments in August reflect customer demand in earlier months, with lenders reporting that current processing times mean that August finance commitments reflect customer demand in June and early July, prior to Victoria imposing stage 3 and stage 4 restrictions."

He went on to summarise the pick of the ABS findings, highlighting Queensland's influence on the stats: “The value of loan commitments for investor housing rose 9.3 per cent for the month, but was down 4.6 per cent for the year, with Queensland and Victoria driving the increase in commitments for investment housing in August. The number of owner-occupier first-home buyer loan commitments increased by 17.7 per cent for the month. This is the third consecutive monthly increase and is the highest level since October 2009.”

It is thought that the lending recovery is a reflection of movement restrictions being lifted in some parts of the country. However, national figures might soon come to register the knock on effect of Melbourne's second wave of restrictions as a result of a rise in COVID-19 cases.

Best time to borrow?

The factors above, allied with the Federal government's ambitions to lift restrictions on borrowing by early 2021, and low-interest rates, might equate to a great time to buy.

In the Courier Mail's report, there was also the suggestion that the effect of the COVID pandemic, and calls to ease borrowing restrictions, could lead to a better balance for borrowers.

Antonia Mercorella, the Real Estate Institute of Queensland's Chief Executive, told the publication that the Royal Commission concerning bank practices revealed some undesirable policies, and that this development has led to banks pulling back the reins on lending: “It was not that long ago that we had a Royal Commission into banking practices and there were some pretty dark and damning revelations that came out of that. As a result we saw the pendulum swing, perhaps too far in the other direction, where the banks became too tight with their lending practices.”

Ms Mercorella went on to explain that an ideal balance would relax lending laws, while at the same time offering property buyers sufficient protection. She commented: "We welcome lending practices that allow people to be able to make decisions and fund their acquisitions. This is beneficial to mortgagees and also the broader economy, but we don’t want to see the more vulnerable in society to be negatively affected."

Price boom on the coast

The news comes as Queensland's coastal regions are leading the way amid a boom in property prices across the state. According to the newly released Domain House Price Report for the September season, Surfers Paradise home prices have shot up by more than a quarter (25.5 per cent) in the past year. Then there is Sunshine Beach, with its huge 46.5 per cent increase over the last 12 months.

Summarising the positive findings, Dr Nicola Powell, senior research analyst at Domain, said: “Gold Coast units increased 1.2 per cent and units on the Sunshine Coast held steady, both at $435,000. This is a high for units on the Sunshine Coast, while Gold Coast units are back to the peak of mid-2018."

Queensland fronting a "nationwide boom"

Just last week, Terry Ryder of the Property Observer wrote excitedly of a nationwide property market boom which is "gathering momentum".

He noted that "good properties are being snapped up, often within days of being listed – or, in some cases, before being listed". Mr Ryder continued: "This anecdotal evidence from people at the coal-face is supported by the statistics, showing ultra low vacancies, rising rents and upward movement in prices."

And when it came to pinpointing the force behind the development, Mr Ryder didn't hesitate to pick out Queensland as the state which is the "driver of this growth".

He explained that "regional Queensland is one of the places that have strong markets," which he attributed to a trend known as the 'Exodus to Affordable Lifestyle'.

Mr Ryder highlighted: "Markets across Regional Queensland are out-performing on price growth, led by the Sunshine Coast and with notable recovery underway in resources-related markets that have spent several years in decline. Almost three-quarters of locations across Regional Queensland have had annual growth in their median house prices and a similar number of towns and suburbs have had uplift in the most recent quarter."

It is thought that the price rises across Queensland are due in part to the combination of the 'Exodus to Affordable Lifestyle' and robust local economies.

The 'Exodus to Affordable Lifestyle' refers to the growth being experienced in regional towns and cities, in contrast to Melbourne and Sydney. This trend is aligned with a greater number of possibilities to work from home in locations away from the country's biggest cities. And with the lockdown required by the COVID-19 pandemic, the choice to work from home has been made on behalf of many Australians. It is believed that these factors are key drivers in Queensland property price growth.

Talk to Sparrow Real Estate about Brisbane property. Call us on (07) 3054 7050.