Prospective buyers feel positive about entering the property market, but once the house hunt starts, affordability challenges mean it takes longer to find a home than first desired.
They’re the standout takeaways from the latest quarterly Mortgage Choice Home Loan Report, which revealed the stable interest rate environment had been warmly welcomed by those looking to get their foot on the property ladder.
According to the analysis, buyer optimism about entering the property market has spread, with 83 per cent of prospective buyers feeling positive about entering the market.
That’s up from 70 per cent last quarter.
“Buyers are recalibrating their perspective on interest rates and whether there is in fact a ‘right time’ to buy property,” Mortgage Choice Chief Executive Officer Anthony Waldron said.
“After hearing a range of predictions on rate movements, from forecasts that rates would fall multiple times in 2024, to speculation that rates may rise and that cuts won’t come until 2025, buyers are recognising that perhaps the right time to buy is simply when they’re ready.”
But the report also showed a lack of affordable housing had presented a challenge for prospective buyers, with 62 per cent flagging that their search for a property was taking much longer than first expected.
So much so that one-in-three buyers have had to secure multiple loan pre-approvals due to not finding a property inside the pre-approval window.
To overcome such challenges, 82 per cent of prospective buyers said they had compromised on their buying plans, with 60 per cent planning to buy further from the city or in a regional area, while 50 per cent said they were looking at buying a smaller home.
Some 35 per cent said they were planning to buy an apartment instead of a house and 23 per cent said they were looking at a duplex.
Mr Waldron said the research also showed that, in the current economic climate, the outlook and experience of workers in different industries varied, with 65 per cent of homeowners working in healthcare reporting that they now expect it to take longer to pay off their mortgages, compared to 51 per cent of people in professional services.
Compared to other industries, workers in professional services were also feeling more positive about their property purchase plans, more likely to feel they would benefit from Stage 3 tax cuts to save for a home and less likely to compromise on the size of the home they planned to buy.
Rising property values had also pushed up loan sizes, with the national average loan submission size in the June quarter reaching $594,864, which is 9 per cent higher annually.
At a state level, NSW/ACT has the highest average loan submission size at $689,272, while SA/NT has grown the most, increasing 17.1 per cent annually to $555,985 in the June quarter.
“Despite a challenging economic climate and reduced borrowing capacity, in the June quarter the national average loan size continued to remain well above 2023 levels,” Mr Waldron said.
“As a result, buyers are needing to compromise on the location and type of property they plan to buy.
“While borrowing capacities remain reduced due to higher interest rates, the Stage 3 tax cuts are expected to boost borrowing capacity in the coming months and may lead to fewer compromises for some buyers.”
Home loan submission data also revealed that the value of loans to property investors had risen by 20.7 per cent.
