Key trends of the spring housing market

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    The upcoming spring housing market may bode well for first home buyers amid a cooling housing market, according to recent analysis by ME bank.

    The bank expects an uplift in lending activity in spring, as has been the case in previous years. But cooling prices this year means the market has changed from a sellers’ to a buyers’ market, dampening volumes and prices in some regions.

    “Our customers will be waiting to see what the market does or will be driving a harder bargain. Sellers will therefore need to keep reserves realistic and prepare for their property to pass-in at auction,” ME’s head of home loans, Andrew Bartolo said.

    According to Bartolo, the break in rapid house price growth will allow first home buyers previously priced out of the market to find affordable entry points, although strong activity will continue in affordable areas. “First home buyers will benefit from competitive interest rates, concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys.”

    Bartolo also expects declining investor interest. “With prices coming off their apex, the market cooling and APRA’s investor-focused lending restrictions taking effect, we expect many investors will be sitting tight and considering their options.”

    Separate figures from the Housing Industry Association (HIA) showed that first home buyers’ share of owner occupier housing loans has reached its highest point since late 2012, as they accounted for nearly a fifth (18.1%) of owner occupier home loans in June.

    However, the bank also warned that access to credit will remain tight, despite the 10% investor growth cap starting to come off some lenders. The 30% cap remains in place for interest-only loans, a product typically used by investors. Banks have also been tightening serviceability requirements, which has constrained overall volumes of lending by borrowers,” Bartolo said.

    ME also expects refinancing to pick up as more customers look for betters home loan deal, as banks compete for owner occupied customers.

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