Is the Australian property boom over?

During 2015 the home loan market has seen significant changes with lenders introducing higher interest rates and stricter deposit requirements for investor borrowers.

The roll on effect of these changes for investment loans could be a lower than usual spring property selling season, with the Australian Financial Review stating that Sydney has seen the lowest spring clearance rates in three years. 

RELATED: Banks tempt owner occupiers with competitive home loan deals

While capital gains were slow across the housing market in August, findings from RP Data indicated some hope for the Australian property industry with trend growth remaining high.

The research from RP Data showed that capital city dwelling values continued to rise over August, however there were considerable variations in the performance of the housing market from city to city.

While Sydney has had a lower than usual spring clearance result, it still obtained the highest month-on-month movement, with dwelling values up by 1.1% in August, followed by Adelaide with an increase of 0.7% and Darwin rising by 0.3%. In Melbourne and Brisbane dwelling values were flat over the month and the remaining capital cities recorded a month-on month fall in dwelling values.

When it came to yields, Sydney and Melbourne’s rental rates were found to be at record lows. CoreLogic RP Data head of research, Tim Lawless said that the low yield scenario has largely been overlooked by investors who appear to be more focused on chasing future anticipated capital gains rather than aiming for cash flow.

“The slower rate of capital gain for August is likely to be a welcome relief for the RBA who has expressed some concern about the heat emanating from the Sydney and Melbourne housing markets.”

Lawless said that the findings were only a month worth of data, so we should be cautious interpreting this as a slowdown in the overall trend of value growth. “In fact, the quarterly and annual trend of capital gain remains high in Sydney and Melbourne.”

The Spring season will provide a timely test for the housing market, said Lawless and it will be important to monitor whether buyer demand keeps pace with the additional number of homes being advertised for sale.

Are you looking at purchasing property in the spring selling season? Kick off your comparison of home loan deals here.

Home loan comparisons on Mozo - last updated 13 August 2022

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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