A word from ANZ
ANZ & brokers: Working better together
At ANZ, we’re deeply committed to our brokers and continually strengthening our relationships. Over the past year, we’ve enhanced the ANZ experience to better support brokers and their customers.
Every broker benefits from the dedicated attention of a dedicated residential broker manager, who helps streamline each home loan assessment process for quicker, more efficient responses. Combined with updated processes, competitive pricing, and simplified products, it’s clear why now is the perfect time to partner with ANZ.
Feel the difference and see how we’re making it easier for you to succeed.
Australian Credit Licence Number 234527.
Given the choice, most people would probably rather spend their downtime in the warmer months lazing at the beach rather than standing shoulder-to-shoulder with a driveway full of auction bidders in the middle of a 36-degree day. So, it’s perhaps unsurprising that summer isn’t typically the busiest period on the real estate calendar.
For investors, the unit sector and more broadly the upswing of the first home buyers segment are both uncovering favourable opportunities
- Natalie Smith, ANZ
However, when the supply of homes available to buy is lower than normal, it can feel like the market is running hot. This summer, first home buyers, investors, and owner-occupiers timing the next big move will all likely be paying close attention to the real estate listings.
Natalie Smith, ANZ’s general manager, retail broker, agrees.
“For investors, the unit sector and more broadly the upswing of the first home buyers segment are both uncovering favourable opportunities,” she says.
Location, location, location
As is usually the case, the spring season saw an uptick in selling activity with 28,960 new listings added nationally in the four weeks ending 17 November 2024, according to CoreLogic’s Property Market Indicator, bringing the total number of listings to 93,271.
Total auctions for the week ending 17 November 2024 (2,882) were slightly down on the same time last year (2,990), albeit with a higher clearance rate (64.1 per cent) than the previous corresponding period (62.4 per cent), in weighted average terms.
Speaking to The Adviser about how the property markets have been faring so far this year, Daniel Gradwell, ANZ’s associate director for property insights, suggests 2024 has been a mixed year in terms of property demand and prices – a trend that is expected to continue through summer.
However, the fundamental imbalance of Australia’s housing market has created opportunities for the different segments of buyers.
“Population growth has been exceptionally strong, and the market has really struggled to build enough new housing,” Gradwell says.
“This has underpinned a significant supply/demand imbalance, and pushed prices higher. While population growth (led by overseas migration) is already slowing down, it remains rapid enough to keep pressure on prices over at least the near term.”
Between March 2020 and October 2024, dwelling values increased more than 65 per cent across Perth, Adelaide, and Brisbane, according to ANZ-CoreLogic Housing Affordability Report data released in November, outpacing gains seen in Sydney (up 29.1 per cent), Hobart (up 27.7 per cent), and Melbourne (up 9.9 per cent).
But at the same time, some parts of Australia have become more affordable.
Melbourne, for example, has gone from Australia’s second-most expensive capital by median dwelling value in December 2019 to the sixth-least expensive, with prices falling for seven consecutive months (down 5.1 per cent from the March 2022 peak).
“Prices have been much softer across the rest of Australia. The likes of Sydney, Canberra and Melbourne have been impacted by larger mortgages, and therefore greater sensitivity to the rapid increase in interest rates,” Gradwell says.
“Melbourne is also particularly impacted by weaker buyer confidence on the back of a softer economy, and ongoing changes to the taxation of property. Some respite for these locations is expected in 2025 due to predicted lower interest rates, while buyer confidence in Melbourne is expected to eventually improve as the state economy emerges from its slumber.”
Commenting on the increasing affordability of units (relative to houses) and the sluggish market in Melbourne, Smith suggests that “brokers could focus on targeting the first home buyers segment in those areas.”
“Despite affordability challenges, first home buyers as a share of owner-occupied lending is holding above average, with government schemes to incentivise first home buyers to enter the market. These customers may also be able to utilise first home buyer cashback offers, such as the current offer available through ANZ,” she says.
Affordability bites
Throughout all of this, affordability pressures remain acute. In October, the total value of residential real estate ticked past $11.1 trillion according to data in CoreLogic’s Monthly Housing Chart Pack for November 2024, representing 11.2 million dwellings and $2.3 trillion in outstanding mortgage debt.
Median incomes, while increasing by 2.7 per cent to $101,000, have not kept pace with dwelling values (up 8.5 per cent) or rents (up 9.6 per cent), according to ANZ and CoreLogic’s most recent Housing Affordability Report.
Meanwhile, the national median dwelling-to-income ratio – a metric comparing the cost of buying a home to the average household income – continued its upward trajectory to 8.0 in November, well above the 20-year average (6.7).
It now takes a median-income household 10.6 years to save for a 20 per cent deposit, superseding the 20-year average of nine years. And even if they manage to snag a place, more than half (50.6 per cent) of their household income will go towards servicing the loan.
Gradwell says: “In cities like Perth, Brisbane and Adelaide, property prices are expected to continue to nudge higher.
“But prices are much more subdued in other parts of the country, especially Melbourne where values have been in decline for most of the year.
“This is likely to remain the case for the next couple of months, before a refresh in 2025 drives more convergent outcomes across the country.”
Opportunities across buyer segments
Buyers’ markets with fewer buyers (mostly due to constrained borrowing capacity) are good news for investors and 2024 saw this segment flock to the market.
The value of new loan commitments for investors tipped $11.6 billion in September 2024, according to the latest Lending Indicators data release from the Australian Bureau of Statistics (ABS), a 29.5 per cent increase compared to the same period in 2023 ($8.9 billion).
Smith says: “Investor activity is still rather strong in the market (with the value of Investor lending up 34.2 per cent in the past year, more than double the increase in Owner-Occupier lending at 16.8 per cent, as per the November 2024 CoreLogic Home Value Index).
“There is an opportunity to build out interstate investment capabilities for a number of brokers – and partner with banks who can facilitate these kinds of transactions more efficiently.”
Rising house price-to-unit price ratios across markets such as Sydney, Melbourne, Brisbane, and Perth have created another dynamic and a potential opportunity for segments with lower serviceability.
“As affordability constraints start to bite, this could make units an increasingly attractive proposition, especially among first home buyers,” Gradwell adds.
Temperature check
In the coming months, all eyes will likely be on interest rates, with many would-be buyers likely keeping their powder dry in anticipation of a cut happening sooner rather than later.
“While financial markets remain fairly volatile in response to events both within Australia and overseas, the expectation of lower interest rates next year is likely to open a window of opportunity in terms of mortgage pricing,” Gradwell says.
“Interest rates are unlikely to return to the COVID-induced emergency lows, but any reduction would ultimately support purchasers’ borrowing capacity, as well as create [an] opportunity to think about the benefits of floating versus fixed rates.”
Smith also predicts an uplift in the refinance market “with the prospect of RBA interest rate cuts on the horizon, there is a likelihood of this activity picking back up”.
“However, with customers on contemporary rates, it may take a while to observe the change,” she adds.
Mortgage brokers would also do well to keep an eye on developments such as any recommendations detailed in the final report from the Senate economic reference committee’s inquiry into Australia’s financial regulatory framework and home ownership, chaired by senator Andrew Bragg, expected to be finalised at the start of December.
The federal government has set an ambitious target of building 1.2 million homes across Australia in the five years from mid-2024, detailed in the National Housing Accord. And the outcome of an impending federal election – due to be held no later than the end of May 2025 – could also see shifts in policies and focus.
These dynamics make the broker role more crucial than ever during this summer property season, even if it isn’t as busy as other times of the year. Brokers have an opportunity to position themselves as invaluable guides helping clients navigate affordability constraints, identify market opportunities, and secure financing in a complex environment.
So, while some may be tempted to spend the warmer months on a pool deck sipping piña coladas, brokers who keep an eye on Australia’s property markets will be well placed to service their clients, whether they’re investors, refinancers, or cutting the ribbon on their first property.
Disclaimer: The information on this page does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you.
Australian Credit Licence Number 234527.
