Amidst persisting concerns on housing affordability, cashed-up buyers are gaining confidence in buying suburb properties in Australia today.
With the Australian Prudential Regulation Authority (APRA) easing bank’s assessment criteria by reducing affordability buffers, buyers could get an additional of up to 20% more on their borrowing capacity.
This could boost the market in the high-end suburbs. In fact, according to CoreLogic, the upper end of the market has already seen some movement this early.
Senior research analyst from Corelogic, Cameron Kusher said that while the upper end of the housing market has seen some of the biggest declines, the segment, as a whole, has shown the strongest improvement over recent months.
He said, “The adjustment to serviceability limits, the removal of this limit, and the change to a 2.5 per cent buffer mean people that were in a position to already get a mortgage can potentially now borrow more. With higher valued properties having recorded the largest value falls, owners looking to upgrade may now be looking to buy.’’
As cashed-up Gen-Xers, armed with more budgets, get back in the property market and competition heats up over suburb property, demand and supply are sure to reflect this development.
Empower Wealth’s research head, Jeremy Sheppard, said competition and low stock will continue to drive the prices higher over the next three years.
“Demand and supply indicators point to a stronger performance in these areas with houses in Toorakset to rise by 17.1 per cent, Wollstonecraft house price to grow by 14.2 per cent and Mosman by 13per cent,’’ he said.
APRA’s reduced affordability buffers is making an impact on the overall recovery of the real estate property market.
Recent data from CoreLogic shows the broader market is already showing signs of development.
Property Market is Booming!
Tim Lawless, head of their research, said ““The stabilisation in housing values is becoming more broadly based, with five of the eight capital cities recording a subtle rise in values over the month, while the regional areas of South Australia, Tasmania and Northern Territory also recorded a lift in housing values in July.”
Of course, while low affordability buffers help, experts acknowledge other factors. “All of which is creating a stronger selling position for vendors,” says Mr Lawless.
Low-interest rates, improved credit scheme, growing confidence in the property market, and the increased buying power APRA’s reduced affordability buffer brings, all led to this significant change in the market. Combine them all and you have a perfect recipe for a healthy real estate property market.
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