Property market comes to a halt, a plus for first home buyers

Belinda Punshon 31 March 2016

Property market comes to a halt

The numbers show that property price growth is slowing down which could spell greater future housing affordability.

It's plain to see that the property market is beginning to stabilise as recent data shows that the value of real estate is stalling, which is good news for first home buyers who have previously competed with cashed-up investors.

The subdued price growth may be due to a plethora of factors including the restricted access to finance following APRA’s intervention for deposit-taking institutions last year, and the current uncertainty in global markets.

The year-on-year national housing growth from February 2015 to February 2016 was 6.14%, while the quarterly growth in the Australian house market was -0.04%.

Although six states recorded positive quarterly growth, the growth for each market was nearly negligible, at less than 1%.

Interestingly, South Australia (SA), the Northern Territory (NT) and Western Australia (WA) saw a decline in median house values from February 2015 to February 2016.

New South Wales (NSW) saw the highest positive quarterly growth of 8.95% while Western Australia (WA) recorded the lowest growth of -3.13%.

Housing

StateMedian valueGrowth (Feb 2015 - Feb 2016)Last quarter
ACT$573,0003.84%0.60%
SA Country$258,500- 0.05%-2.24%
QLD Country$397,5002.63%0.25%
NT$515,000-2.76%-4.61%
TAS Country$274,0003.96%2.68%
VIC Country$367,5005.38%1.78%
WA Country$330,500-3.13%0.67%
NSW Country$429,5008.95%0.77%
Australia$514,0006.14%-0.04%

Source: onthehouse.com.au February Market Summary (Houses)

For the unit market, the national price growth figure for units was 5.27% in the 12 months leading to February 2016, while the quarterly growth was just -0.32%.

Western Australia (WA) saw the biggest year-on-year decline of -10.63% followed by the Northern Territory (NT) which recorded -4.93% growth.

Units

StateMedian valueGrowth (Feb 2015 - Feb 2016)Last quarter
ACT$405,0001.95%0.91%
SA Country$232,500-4.18%1.45%
QLD Country$336,0005.12%0.41%
NT$373,500-4.93%-3.95%
TAS Country$203,5002.76%2.00%
VIC Country$274,0004.91%1.82%
WA Country$289,000-10.63%-3.97%
NSW Country$359,0008.70%0.29%
Australia$472,5005.27%-0.32%

Source: onthehouse.com.au February Market Summary (Units)

Affordability

Although Australia’s property market has been overheated in previous years, it appears that property (and finance) may become more affordable to first home buyers and low-income earners in the months to come.

Interestingly, NSW and VIC have average mortgage sizes of $400,000 and both states require more than 30% of household income to service mortgage repayments. However, if property prices continue to fall, then the average mortgage size and perceived affordability may also improve.

As the market slows down, home buyers can take their time to make more informed decisions regarding their finance and property options. Ensure that you practise due diligence by researching different suburbs and properties and comparing different home loans available on the market.

To understand how much you can afford to borrow for a home loan, use our borrowing power calculator.

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Image: Shutterstock

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