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Record number of mortgages discharged and registered in NSW in 2021

The number of people discharging their mortgage in NSW has hit an all-time high as locked-down homeowners use their savings to pay off their mortgages, refinance their home loans to a cheaper deal or trade in their homes, new figures reveal.

In July, more than 27,000 residential mortgages were discharged from NSW Titles, up 37.1 per cent on July 2020, according to NSW Land Registry Services data.

Last year’s figures were up 12.3 per cent compared to July 2019.

It comes at the same time residential mortgages registered on NSW Titles also hit an all-time high. Just shy of 29,000 home loans were recorded in July, up 41 per cent from July 2020.

The booming property market has been a hive of activity since the majority of the country came out of lockdown last year. Owner-occupiers drove that recovery, with a record number of first-home buyers entering the market and existing homeowners trading up or down.

NSW Land Registry Services director of analytics and insights Jerry Goldfried said the record figures of discharges and registrations of mortgages were driven by very strong residential sales activity and record refinancing volumes.

EY Oceania chief economist Jo Masters said the household sector had built a war-chest of savings, driving strong housing market activity. “Households have been awash with cash,” Ms Masters said. “Turnover was at a 19-year high and 45 per cent above pre-COVID levels. When you have high levels of turnover, you’re going to have high levels of mortgages discharged and new mortgages.”

Whether households were entering the market for the first time, paying off their mortgage or simply switching from a variable rate to a fixed rate, Ms Master said, low-interest rates had also propelled much of the market activity.

Shane Oliver, AMP Capital chief economist, also said the market was pushed along thanks to record household savings in the past year, helping many households pay down their mortgage more quickly or in its entirety.

“People were flush with cash. Most Australians kept their jobs and their incomes were topped up with JobKeeper,” Dr Oliver said. “The fact that a big chunk of Australians have spent that money discharging their mortgages is arguably money well spent.”

He said it could also suggest a pick up in investor demand, which was a segment of the market that had begun to increase based on home loans data just before the Delta outbreak in Sydney.

But CommSec senior economist Ryan Felsman said not everyone had benefited from the pandemic restrictions in the past year.

“Like everything in the pandemic we’ve seen rising inequality. Those who have managed to survive are saving more and paying off debt,” Mr Felsman said.

“Then on the flip side. of course. we’ve seen evidence during bouts of hardship where we have seen those loan deferrals and requests for assistance pick up as well.”

More than 18,106 home loans are now deferred across the big four banks, lifting almost 20 per cent in the week prior to August 15, according to the Australian Banking Association.

Mr Felsman said many of the households that had managed to keep their jobs were in a better financial position, with some even able to increase their property portfolios in regional areas.

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Opportunity knocks for bold homeowners as house listings tumble in July

Kirsten Craze 20 Aug 2021

Opportunity knocks for brave vendors who are willing to list their homes amid mass lockdowns, according to new research revealing sellers were spooked in July.

The latest REA Insights report out Friday demonstrates that the wave of restrictions introduced in late June – which initially saw almost 12 million Australians locked down — had an immediate impact on the property market.

New listings dropped by 27.3 per cent in Sydney, 14.2 per cent in Melbourne, 6.6 per cent in Brisbane, and decreased by 26.9 per cent in Adelaide during the month.

However in the ACT, where restrictions hadn’t kicked in during July, listings jumped 23.3 per cent.

“The surprising thing about this data is just how much of an impact lockdowns have had on confidence, especially considering we’ve been through this a few times before,” said Cameron Kusher, author of the report and REA’s director of economic research.

“It’s particularly hit hard in a market like Melbourne where you can’t have one-on-one inspections anymore, so it’s probably not a surprise to see things pull back there.

“But I guess it shows that while the market is really strong, there’s a little bit of caution around at the moment.

“As soon as people feel like it’s going to be more difficult to sell their property, they’re going to be less inclined to put it on the market.” he said.

Where there are signs of opportunity for vendors, according to Mr Kusher, is in the property portal’s search data.

While the latest lockdowns have hit supply hard as sellers sit on their hands, national search demand on realestate.com.au was at near-historic highs throughout July and heading into August.

“Vendors are seemingly quite reluctant to list their properties, but we still know that demand is very high,” he said.

“So, if someone is willing to bite the bullet and put their property on the market they might actually find it’s quite successful just because there’s not much stock on the market.”

“It’s going be a bit different everywhere. So in Brisbane, Adelaide and Perth there’s probably no reason for any real damage to the spring selling season, but depending on how long the Melbourne lockdown goes on there might be a bit of a late start to spring sales.

“For Sydney, at the moment I guess it’s a case of all bets are off. I wouldn’t think we’d see much of an increase in listings in Sydney until lockdowns are over, whenever that might be.”

However savvy sellers might want to time the market to avoid drowning in competition when lockdowns are lifted.

“As we have seen over the past 18 months, the property market responds to restrictions being eased almost immediately. Based on the market behaviour following previous lockdowns, we would expect once current lockdown restrictions end, there should be a rapid rebound in the volume of new listings coming to market,” Mr Kusher added.

The REA Insights Report for July breaks down where new listings are increasing and decreasing across the country.

Sydney 

Although Sydney experienced the largest drop in listings recorded since national lockdowns commenced in April 2020, this dramatic lack of stock is not being felt across every suburb.

For Freshwater in Sydney’s Northern Beaches, new listings actually increased by 63 per cent followed by Wamberal on the Central Coast which was up 55 per cent and the nearby township of The Entrance at 50 per cent.

“In welcome news for buyers circling the eastern suburbs, new listings have fallen the least year-on-year in the region. However, supply remains tight and listings remain low,” Mr Kusher said.

There has been less choice for buyers around the north western suburbs.

“Sellers in Ryde currently face reduced competition, as the region had the fewest new listings in July of any Sydney SA4 region and the largest year-on-year decline. This indicates that buyers in the area have limited choice,” he said.

The biggest year-on-year decreases in Sydney’s listings numbers occurred in Thirlmere in the city’s far south west with a drop of 68 per cent, in West Ryde and Northmead where they fell 64 per cent.

Melbourne 

The report suggested that vendors in the north east of Melbourne could take advantage of a quieter market, with the region recording the largest year-on-year decline in new listings for July of any SA4 region with a 20.5 per cent fall.

Conversely, purchasers have more options closer to the city.

“Buyers in the inner east currently enjoy more choice, with the region the only in Melbourne where new listings increased our the past year, up 1.8 per cent. The overall supply of stock, however, remains low,” Mr Kusher said.

The biggest increase in new listings occurred in Melbourne’s north in Glenroy with a whopping 137 per cent hike, followed bay Roxburgh Park with a jump of 123 per cent and Broadmeadows with a 118 per cent rise.

Listings dropped significantly in Mount Martha on the Mornington Peninsula with a year-on-year fall of 67 per cent, in Wollert in Melbourne’s semirural north at 58 per cent and Keilor East which was down 52 per cent.

Brisbane 

With a much smaller decline in new listings, the Queensland capital is home to more confident vendors, but REA’s Insight report still showed the total number of properties listed for sale in Brisbane during July was the fewest on record.

Where sellers seemed to have taken a step back – and where a window might be opening up for vendors according to Mr Kusher’s report — was in Moreton Bay North where the region recorded a 15.3 per cent reduction in new listings, the largest year-on-year decline in Brisbane.

More options are on the table for buyers west of the city.

“Buyers in Brisbane-West will be relieved to see some new stock hitting the market as the city’s only region in which new listings are higher year on year, up 7.5 per cent,” Mr Kusher said.

The biggest increase in new listings came north of Brisbane in Petrie with a 127 per cent jump followed by suburbs in the city’s south west like Bellbird Park where listings rose by 120 per cent and in Redbank Plains at 107 per cent.

Alternatively in Brisbane’s south, Oxley and Tarrangindi both saw new listings drop by 54 per cent, while in New Farm they fell by 49 per cent.

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Why the housing market and household finances are still in good shape, despite lockdowns

Government income support, the onset of the vaccine rollout and familiarity with lockdowns has helped households stay afloat and avoid major financial or housing distress so far, economists say.

With Sydney entering its eighth week of lockdown, the rest of NSW also locked down this week, and Melbourne, Canberra, Darwin and Katherine also locked down, there are concerns that as restrictions drag on they will weigh down on the housing market and household financial situations.

But so far there are very few signs of housing distress when compared to last year: loan deferrals are at a fraction of the first lockdownprice discounting is minimal and there is a relatively low number of distressed sales.

CoreLogic found auction clearance rates fell to 72.3 per cent across the combined capitals last weekend, but had fallen from a very high base and continued to be a strong indicator for households’ appetite to transact on properties, even through lockdowns.

Strong support and healthy balance sheets

Commonwealth Bank of Australia’s head of Australian economics, Gareth Aird, said the support of banks and governments had helped give households confidence throughout this outbreak.

“There’s a collective recognition that the lockdown doesn’t go on forever, and [that] the vaccination rate going up will re-open the economy,” Mr Aird said. “A lot of households have saved quite a bit of money over the past year and it could be the case that they’ve got enough saved up.”

Last year many households took out loan deferrals pre-emptively as an insurance policy and did not need it in the end, he said, which could explain why uptake of that safety measure was low this time around.

When Sydney entered this lockdown, many households had strong balance sheets and the housing market was at an all-time high, said Jo Masters, EY Oceania chief economist.

“The economy was strong going into this, we understand more about [COVID-19], and I think there is less fear around losing your job and greater confidence that house prices can be resilient,” Ms Masters said.

“Households went into this with a significant savings buffer saved up over the last year. We can’t go out and spend a lot and income is being broadly supported,” she said, adding that consumer confidence had fallen but it was nowhere near last year’s levels, and it had also fallen from a higher level.

About $55 billion was deposited into offset and redraw accounts around the country in the first quarter of this year, the Reserve Bank of Australia found.

The combination of record house prices, more savings, less spending and very low interest rates was still working towards a robust housing market, she said.

“The fundamentals underpinning the housing market would suggest it’s quite resilient,” Ms Masters said.

While there would be pockets of Sydney where households would be struggling, she said, on the whole households and the broader housing market was performing well.

“There are whole parts of the rest of the country doing OK still. WA’s economy is looking really strong, South Australia has had minimal disruption and Queensland has had relatively little disruption. Whereas April, May last year there was a nationwide lockdown.”

With mortgage holidays on offer, government income payments and a plan out of lockdown, there was enough material support and consumer confidence for households to hold on, said Paul Bloxham, HSBC chief economist.

“When households or businesses look forward, you see a pathway out and that involves a vaccine rolling out and the eventual reopening of the economy,” Mr Bloxham said. “It is very different from the experience we had in the first half of 2020.

“Overall the housing market is well supported pretty much across the country. The major factor there is that interest rates are going to stay for a long time”

He said there was also a tangible sign of confidence through the sustained clearance rate: “People willing to buy and sell houses is a sign of some confidence … they’ve all weakened but they’re in a lot better shape than the initial shock in 2020.”

Signs of a slow-down

Sydney asking prices for houses have fallen four straight weeks in a row, down 4.5 per cent in the past 30 days, an early sign that the ongoing restrictions were beginning to slow down the Sydney housing market, said Louis Christopher, SQM Research managing director.

“We’re reporting very high sold-prior rates. Vendors are willing to take the offer, they don’t want to muck around and want to sell,” Mr Christopher said.

With housing finance approval falling in June too, first-home buyers and owner-occupiers could be holding back a little bit, he said. “If these lockdowns make it all the way through to December that’s got to be bad news for the housing market.”

But at the moment, distressed stress selling was lower than last year with 798 distressed listings in NSW, Mr Christopher said.

Back in October last year, there were 2250 distressed listings in NSW.

The recovery

A lot remains unknown as the other side of lockdown is unfamiliar territory, economists agreed.

“This time around we’re not exiting out of COVID-zero and we don’t know what that means; how households will spend, the amount of people returning to work, mobility in the CBD,” Mr Aird said.  “We’re in uncharted waters, basically.”

He said it was “early days” and there were still a few more months to go before Sydney’s economy returned to any kind of normality.

“As that dawns on households and businesses, you’re likely to see more cause for support, particularly for businesses.”

The economic recovery could look different too, with less of a snapback like that experienced last year, said Mr Bloxham.

“It might be a lot more gradual this time around … it could be quite a bit of time yet before we get a stronger recovery and that will continue to put some stress on households and businesses,” Mr Bloxham said.

“It’s holding up much better than last year but we have to watch and see how it all plays out over the next few months.”

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Brisbane’s Olympic property boom set to push these suburb prices sky high

House prices in key inner Brisbane suburbs are tipped to more than double in the decade leading up to the 2032 Olympics as economists predict an imminent golden age of property for the Queensland capital.

The city’s thriving inner east – including Woolloongabba and Dutton Park – and Albion, Paddington, Hamilton and Kelvin Grove are some of the hot spots expected to boom off the back of major infrastructure spending ahead of the games, with Greater Brisbane set to soar past the million-dollar median house price mark soon, experts say.

New data from PRD revealed Brisbane’s median house price could collectively rise to $1.2 million by 2032, with Hamilton – which will accommodate the athlete’s village – predicted to leap from its $1.65 million house price average to just under $4 million after the Olympics.

Tennyson, which currently boasts a median house price of just under $1 million, could rise to just over $2 million and Woolloongabba – where many Olympic events will be held at the Gabba – could also soar from its current median of $1.086 million to just over $2 million, the PRD report said. According to the Domain House Price Report for the June quarter, Greater Brisbane’s current house price is at a record high of $678,236.

Ray White’s national chief economist, Nerida Conisbee, said while the Olympics would likely serve as an insurance policy to keep the real estate sector’s cogs spinning, the city was already charging towards a sizzling decade of property growth – partially thanks to COVID-19.

Many inner suburbs, she said, were now poised to sprint past the $1 million median house price milestone in coming months as long as interstate migration continued and the state could maintain its already low coronavirus case numbers.

“The other thing that is great about Brisbane is, while it’s getting more expensive, it’s still relatively cheap, so even though we’re starting to see some movement in pricing it’s still good and it’s still offering a cheaper alternative to other cities,” Ms Conisbee said.

“As for the Olympics, it puts Brisbane on the global stage so I guess one of the things that will help Brisbane over the coming years is simply maintaining that high level of migration … but at this stage, I don’t see it softening.”

While house prices in some suburbs within the city’s golden inner ring had already jumped by more than 30 per cent over the past year, Ms Conisbee said even blue-chip pockets such as New Farm were considered a steal compared to their Sydney counterparts. This, coupled with the lifestyle on offer in Queensland, had driven a record number of migrants from NSW and Victoria.

“I think definitely the inner suburbs are worth looking at and the premium suburbs are the ones to watch … you can’t live in the best suburb of Sydney for $2 million so that’s where Brisbane is looking really good at the moment,” Ms Conisbee said.

While a number of Olympic events will be scattered around the city and even on the Sunshine Coast and the Gold Coast, said Place Estate Agents Bulimba lead agent Matthew Hackett, eastern suburbs close to the Gabba were already posting incredible price growth with demand continuing to skyrocket.

“While the potential with the Olympics is hard to say because we don’t know where the market is going, I think house prices could go up 65 per cent in the next year (in key inner-east pockets),” Mr Hackett said.

“In fact, in the next six months we’ll see extremely good growth as a lot of people are still coming from interstate. Brisbane is coming into its own now and I would definitely be buying within a four-kilometre ring of the city.”

Mr Hackett said the city’s south side would also soar, with spots such as Mount Gravatt attracting a record number of buyers and, as a result, posting major price growth.

“I just sold a home there at auction over the weekend for $900,000 and it sold just a few months before for $750,000,” he said.

The city’s long-suffering apartment market is also tipped to grow off the back of the housing market boom, with high-end units already in hot demand, Mr Hackett said.

According to Place Advisory, Woolloongabba’s prime positioning as a central hub for the Olympics would ensure high price growth moving forward, particularly with a “much-needed” facelift worth millions on the cards and increased connectivity provided by the Cross River Rail.

Place Advisory said it expected Annerley, Dutton Park and Coorparoo to also soak up the “flow-on effect”.

Thanks to the proposed conversion of Albion Park dog track into a stadium, the team also tipped the inner-northern suburb to soar, alongside Portside and Hamilton which, aside from being the home of the athlete’s village, also has the new cruise terminal.

Finally, Herston, Kelvin Grove and Paddington are expected to reap the benefits of the games, thanks to Brisbane Live being the likely hub for entertainment in 2032.

Brisbane local Tracey Parr has already witnessed the gargantuan rise of the city’s inner-eastern precincts, having just sold her investment home at 29 Geelong Street, East Brisbane for $1.192 million at auction last Saturday.

The three-bedroom cottage “in desperate need of a reno” last sold for $640,000 in 2011 and has been “rented out every day since”. Dozens of buyers flocked to the home as the spotlight increasingly turned on the popular suburb.

“Brisbane has generally gone through a lot of growth in the past six months but particularly that precinct (around Geelong Street) because it’s so close to the city and just walking distance to the Gabba,” Ms Parr said.

“So there was a lot of interest [at the auction] and we had 11 bidders. That area is really up and coming, there’s a lot of potential and it’s already got really charming cafes.

“It feels a lot like Melbourne now.”

Ms Parr said she felt the area was fast becoming a golden ticket for investors with all the ducks now in a row for nothing short of a house price explosion.

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Tougher lending landscape for some homeowners and easier for others: mortgage brokers

Prospective homeowners in hard-hit COVID-affected industries and cities could find it more difficult to get a home loan approved now compared with the start of the year, mortgage brokers say.

But anyone else who has been lightly touched by the on-again, off-again restrictions and is able to retain their job may actually find it even easier as banks take a more “common sense” and speedier approach in handing out mortgages.

The Reserve Bank of Australia remains resolute in holding the cash rate at 0.1 per cent, and its central scenario is to keep it there until 2024.

But the home-lending landscape has already become tougher with some banks raising floor rates — Commonwealth Bank of Australia recently increased its serviceability floor rate from 5.10 per cent to 5.25 per cent — while others place more scrutiny on discretionary living expenses, which potentially leaves some with less borrowing power.

“Things like school fees, dining out, pet expenses, they want that built into your monthly expenses. It’s something they’re looking at more and more,” said David Thurmond, Mortgage Choice Berwick principal in Victoria.

He said lenders in Victoria were also enforcing the debt-to-income ratio policy more closely. This prevents homeowners from borrowing more than seven to eight times their salary.

While these policies have been around for months now, Mr Thurmond said, banks have begun to pay closer attention in order to tighten lending criteria. “A lot of clients are finding they have a lot less borrowing capacity even though rates have come down,” he said.

“The RBA came out last week saying they don’t want to increase rates. They want to use policies to do it so they’ve come out and shown their cards.

“The government is really concerned about the property market. They did not expect it to take off as much as it did; this is just a way for them to manipulate the industry without increasing interest rates for everyone who has a home loan.”

But in Sydney, it is almost a two-tier market depending on the impact lockdown has had on homeowners, according to Rebecca Jarrett-Dalton, mortgage broker and director of Two Red Shoes.

“We’re finding it perhaps a little bit easier getting approved. It seems it has almost relaxed at the moment,” Ms Jarrett-Dalton said.

“The assessors are still checking but you’re not hitting any hurdles at the moment … that scrutiny is not as forensic at the moment.”

It was a different story if you were affected by the ongoing lockdown, however. “If borrowers are recipients of the disaster payments or income support, it’s a no-go,” she said.

With some of the major banks increasing their serviceability buffer, homeowners hoping to get into the market by borrowing the maximum amount of money would be affected as they had reduced borrowing power, she said.

As lockdown drags on, banks were asking for more up-to-date information from affected workers, said James Algar, Mortgage Choice Dee Why principal.

“It’s fair to say that the banks are showing closer analysis for anyone that is in a perceived COVID-affected industry,” he said.

While the banks were more comfortable with comprehensive credit reporting, which gives easier and better insight into an applicant’s credit history, they were enforcing the debt-to-income ratio policy more closely, Mr Algar said.

“A few more have started to work to that rule and less to exception,” he said. “Previously there was a situation where they asked for the bank statements and were forensic about them … but the reality is they’re asking for less evidence, which means they are happy to rely on alternative sources of information.

“[The banks are] trying to return to a more common-sense lending approach,” he said, adding that this was speeding up approval times.

Domain Home Loans inside sales director and mortgage broker Sam Hyman said while Commonwealth Bank of Australia had changed its serviceability rate, home loan applicants had a large market of lenders to choose from.

“There’s still plenty of other lenders who would be favourable to get similar borrowing potential,” he said. “The reality is CBA often do lead the way as they are the biggest bank and hold the highest market share in terms of market share.

“It’s certainly something to look out for – they are first to act.”

He said he agreed that the debt-to-income ratio policy had definitely come into play over the last 12 months but added there were still plenty of options for home loan applicants as there were not “fundamental changes” to credit policies yet.

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