Bottom of the market.....?
A recent report put together by RP Data has shown that the housing market is possibly beginning to show new signs of life, with data showing housing prices are close to having reached the bottom. The decline in property values has slowed from 0.6 per cent in July to only 0.1 per cent in August according to the RP Data-Riskmark home value index.
According to Cameron Kusher, RP Data senior analyst, "We're probably nearing the bottom of the market -- but not in every city, Brisbane is close to the bottom and so probably is Adelaide. Perth isn't. Values there fell a further 2 per cent this month."
The market is already showing benefits from the increasing chance that the Reserve Bank of Australia (RBA) will cut rates at some point during this year. According to Rismark economist, Christopher Joyce, "As the most interest rate sensitive sector of the economy, Australia's housing market will be the main beneficiary of any rate reductions. Almost all Australian mortgage debt is variable rate."
What is interesting is that a recent independent study has found 16.6 per cent of all new home loans processed during September were on fixed rate loans, compared with 9.4 per cent in August. This is the highest level of fixed-rate home loans since April 2008 where 18.4 per cent of loans were fixed.
It can be expected that this number will continue to increase with the current uncertainty in the economy and people looking for more security around their investments. According to Gina Maltman, State Manager of Loan Market South Australia and Northern Territory, "September has seen some aggressive competition between lenders, who are cutting their fixed rates. I think a combination of factors including, a lack of confidence in the share market, more attractive financing options and the flattening of the property market has caused us to start seeing an increase in investors and first home buyers into some segments of the market."