CONFIDENCE HITS NEW HIGHS

As the first Home Buyers Grant is heading towards

a wind back, many buyers in the market are second

and third home buyers as opposed to first home buyers. 

Non-first home buyer loan commitments increased over the month of August this year as

upgraders stepped up their activity. Consumer confidence and business confidence hit

new highs this week with both of these key indicators increasing over the last month.

In data released this week, housing finance commitments fell over July as first home

buyer showed the first evidence of pulling back on purchases. Interestingly, despite

total housing finance volumes declining, the value of both owner occupier finance and

investor finance increased for the sixth consecutive month; reinforcing the idea that

buyer activity is rippling through into the middle and upper end of the price line.

The improvement is likely to have a positive effect on both the residential and commercial

property markets as there is strong correlation between confidence and market activity.

Rental rates across the country increased by 36% over the last three years up to March

2009. Since this time weekly rents have peaked, with every capital city apart from Darwin

recording declines in weekly rental rates over the last three months. The recent fall in

rental rates can be attributed to a decrease in demand as more renters looked to buy,

taking advantage of low interest rates and the boost to the First Home Buyer Grant.

Such low vacancies as well as the low supply of dwellings across the nation will continue

to place upwards pressure on rents over the longer term. With vacancy rates across the

nation’s capital cities generally below 5%, it is highly likely the recent fall in weekly rents

will be short lived.

Locally we are finding there are still many applications on vacant rentals, but are seeing

the quality of those applications are poor. Many applicants are listed on tenant databases

and are not showing affordability for the property they are applying for. It is becoming more

difficult for landlords to find good tenants that can demonstrate that they can pay the rent

and look after the property.