Auctions are up, but home loan demand keeps falling


Wednesday 14 April 2010

There is a ‘paradox’ in the current property market, with house auctions hitting record levels while home loan demand continues to fall, a commentator has observed.

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Di Bain, a finance columnist for ABC News, noted that the trend has been attributed to the emergence of a two-tiered housing market.
"In one level there are cashed-up investors who have been holding onto their money – they are snapping up established homes looking for a good rental return," said the writer.

"But in the other level are first home buyers and they are being priced out of the market."

Meanwhile, Macquarie Bank economist Brian Redican suggested that many of the auction attendees could be potential first home buyers who got their home loan approvals last year but have not yet been able to secure a property.

New Australian Bureau of Statistics revealed that mortgage demand fell for the fifth consecutive month in February as rising home loan interest rates and tighter lending conditions discouraged some customers to borrow and prompted others to compare home loans.

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