What is going on with lending around Australia?

Is Australia undergoing a shift toward owner-occupier buying?

Here at Cohen Handler, buyer's agents in Sydney, Melbourne and Brisbane help clients get into their very own homes. Our teams help investors wanting to buy residences for rental use, or strata property they can benefit from down the track.

Another major part of the services Cohen Handler provide is finding homes for owner-occupiers. Buying a home that is going to be your primary residence is potentially the most important property purchase you'll ever make. While it may not be the only one, it's certainly the one you'll be spending the most time in.

A May 11 media release from the Real Estate Institute of Australia (REIA) outlines how lenders of home loans have noticed a shift away from investors, and that downturn is great news for anyone after a more affordable patch of their own real estate.

As investors slow down their property buying, the markets could respond accordingly and allow for less extreme median value changes than have been seen in recent times. While growth is still going to be prevalent, it might not reach the lofty heights of Melbourne over the past year, which CoreLogic RP Data states is a whopping 10.14 per cent. Even Sydney has seen large increases, reaching the slightly lower but still impressive 8.93 per cent over the past year.

That leaves Melbourne and Sydney with median dwelling values of $784,400 and $955,290 respectively. For many first home buyers, these figures are far too high to be realistic, and it might well be putting people off. The Australian Securities and Investments Commission's Money Smart website reports that a deposit of 20 per cent is the ideal number for lenders of home loans, and for a house that costs close to $1 million, almost $200,000 for a deposit will be required.

But how are home buyers responding right now, and what will you be able to do with the information?

Investors falling back

REIA President Neville Sanders suggests the current landscape for borrowing money and buying property is slowly but surely starting to show results.

"Despite an increase in the value of investment housing commitments in trend terms of 1.1 per cent, this follows nine months of falling investor lending in response to the increase in mortgage rates for investors and the strengthening of banks' non-price lending terms," he said.

"The housing finance figures for March 2016 show, in trend terms that the number of owner-occupied finance commitments dipped slightly by 0.2 per cent. This follows 18 months of increases. If refinancing is excluded, in trend terms for March, the number of owner-occupied finance commitments decreased by 0.4 per cent."

So, while investor activity has slowed down and created room for other buyers to move into the market, there has been a slight decrease in owner-occupier lending as well. With a lower amount of registered movement on the horizon for any kind of buyer, what will the median dwelling value do?

For a start, there's the potential to minimise the growth, which will keep the housing markets more within reach. For owner-occupiers particularly, that's great news, because it means you might be able to afford a home that, not so long ago, far exceeded your expectations regarding what you could buy.

All of a sudden, a four-bedroom house in the northern beaches of Sydney might be within your price range, because the expansion won't be as extreme. Anyone who is close to buying right now will be champing at the bit to take advantage of some of this information. Families could look at providing the best possible home for their kids, purely because they can afford it more easily.

Mr Sanders concludes that the legislative changes to negative gearing that are on the horizon for next year are, for the most part, helping the current housing prospects of buyers in Australia.

"The lending figures show that the macro-prudential measures introduced are working and that owner-occupiers are the dominant force in the stabilising market."

What will you do to take advantage?

While the environment is ripe right now for buying, any savvy person with money to spend on a home should be making a considered decision. That's going to include undertaking some research, which might well be far beyond the amount of time you can afford to spend.

Research can truly be very time consuming. There are so many thousands of homes on the market that might stick out to you as being suitable, but you won't know if it's right for you unless you see it in real life. To alleviate some of that pressure, attending open homes and trawling through pages and pages of marketed homes, taking on the services of a buyer's agent from Cohen Handler is going to help you immensely. The teams know the markets from years of research and experience, so you'll have peace of mind knowing the options you have in front of you will suit you down to the ground.

Get in touch today – we can help you and your family into the perfect home.

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