What does the fluctuating Aussie property market mean for your ability to get finance?

Nov 21, 2019

Leighton Packer

Leighton Packer

Licensed Valuer

The past year or so has been a rocky one for the Australian property market. After years of double-digit growth, we witnessed a pullback in major markets for the first time in a very long time, with both Sydney and Melbourne feeling the brunt of a correction – albeit a mild one.

Now though, many commentators are saying that Aussie property is showing some signs of recovery.

As we covered in an earlier blog, a lender’s valuation of a property dictates how much credit they’re willing to make available for a purchase or refinance. Those valuations are naturally tied to the property market, so if you’re looking to obtain credit and invest in residential or commercial real estate, it’s important to understand what the market is doing. 

To shed some light, Distinctive Finance’s own licensed valuer, Leighton Packer, discusses the current housing market and how these fluctuations might impact your own property goals.

There’s talk of the housing market making a comeback. Is this what you are seeing? What’s behind the turnaround?

The property landscape is constantly changing. Right now, there’s a perceived bounce – it’s not huge, but there is some uplift and positivity in the market. This is supported by auction clearance rates and some more activity in the property market, where we are seeing properties actually turning over. We’re seeing a bit more supply in the market, a bit more demand for vendors and for purchasers. 

There are a few driving factors for this turnaround, such as the political landscape, post-election and a drop in benchmark rates by lenders, which is making credit slightly more accessible, along with the Reserve Bank cutting the cash rate.

Does this mean the property market is on an upwards trend everywhere?

While there is talk of a bounce-back across major cities like Sydney, Melbourne and Brisbane, it isn’t across the board. And that’s supported by statistics. There certainly are pockets within those metro markets that have done better than others. And typically, they’re usually the ones that were the first to be impacted when the property market was going through its initial downturn. But there are other areas that have remained pretty stagnant. 

What can we expect to see in the property market across the next six to 12 months?

If we look at Canberra, that’s a good example of what I think will happen on a broader scale in the market. The property market in Canberra doesn’t go through the same volatile peaks and troughs as other metro cities and regional areas on the East coast of the country. It goes through more of a gradual increase. There are a few reasons for that – zero unemployment, demand for jobs, which obviously means demand for housing too.  

From my perspective, that’s probably going to be the way that much of the country trends, or certainly the East coast.

What impact do these recent swings have on lending and property valuation?

Well, a few years ago, it was easy for a valuer to go out there and value a property, because the property market was trending upwards, and the supply and demand on the market meant that it was easy to find recent like-for-like sales and compare them to the subject property. That’s proving difficult at the moment for some valuers, especially in those more stagnant pockets that haven’t had as much activity in terms of sales and purchases.

Given the lender’s valuation dictates how much credit they’re willing to make available, it’s important to do your own due diligence on the property, especially if you’re going through an auction process or looking to purchase a new property.

My advice is for people looking to invest in property to have a chat to us first – we can provide advice on whether a property is going to be difficult for a valuer to value correctly, and whether that may have implications on the finance made available.

More About Leighton

With over 10 years of experience in finance as a Private Banker, Branch Manager, Business Development Manager and Mobile Banker, Leighton brings knowledge, big picture thinking and tenacity to Distinctive Finance clients.

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