Data shows signs of ‘a shift in property market dynamics’
Emerging research has suggested there are signs of a new era for Australia’s property market.
A report has found an increase of 6 per cent in new loans issued over the last financial year in comparison to FY23, with 509,955 new loans written over the period.
Not only did the volume of total new loans issued over FY24 record an increase, PEXA’s latest Mortgage Insights report also found a surge in the number of new loans issued on a quarterly basis (March quarter to June quarter), rising by 25.1 per cent (141,872 loans).
National demand for property loans was led by Victoria over the financial year with the highest volume of new loans at 136,461, despite more property transactions settled in NSW and Queensland during this period.
The quarterly increase was driven by NSW and Victoria, which recorded increases to new loan volumes of 35.8 per cent and 23.8 per cent, respectively.
Meanwhile, refinancing activity recorded an 11.9 per cent drop with 396,653 refinances completed in FY24 valued at $211.2 billion (down 0.8 per cent in aggregate value over the year).
The report suggested that this signified the end of the refinancing peak that occurred in FY23 during a time when an unusually large number of fixed-rate loans expired.
PEXA’s chief economist Julie Toth said the increase in new loans and decrease in refinancing activity signals a “shift in property market dynamics” as we move passed COVID-19 disruptions and rapid interest rate adjustments.
“Rising interest rates and stagnant incomes posed challenges for many home buyers and borrowers in the first half of FY24. But as we moved through the year, resilience in the labour market and greater stability in interest rates helped to boost buyer confidence,” Toth said.
“When we look at the differences in loan activity across locations, FY24 saw an unusually high volume of new loans in Victoria.
“Anecdotal evidence suggests this may be related to an exodus of property investors responding to rising state taxes and residential tenancy regulation changes, and a rising proportion of owner-occupier buyers, who are more likely to require a new loan to finance their purchase.”
Additionally, PEXA’s latest Property Insights report revealed a “significant reversal” in pandemic-driven residential property transaction trends across the mainland states.
According to the report, sales activity in metropolitan areas outperformed their regional counterparts in FY24.
The mainland states recorded a total of 663,158 residential property settlements in FY24, a 5.5 per cent increase from FY23.
The residential property market spiked in value terms during FY24, up to $585.6 billion (a 12.6 per cent increase year on year).
However, the commercial property sector recorded a 3.2 per cent drop in settlement numbers during this time, which reflected a “range of market complexities” along with subdued investor sentiment.
Toth said: “Our biggest Metropolitan areas – Greater Sydney and Greater Melbourne – saw substantial growth in property transactions in FY24, with increases of 16.1 per cent and 8.6 per cent, respectively.
“At the same time, regional markets in the same states experienced more modest gains or even declines in sales numbers, indicating a shift in buyer preferences back towards urban living. Sales in regional NSW grew by a very modest 1.1 per cent increase while regional VIC declined by 5.9 per cent.
“New dwelling approvals, high interest rates, elevated construction costs and prolonged construction timelines, are all limiting the pace of new supply, even as demand intensifies.
“This is placing upward pressure on prices and rents for existing homes. Australia will continue to face housing availability and affordability challenges, until we can enable a better balance between demand and supply.”
