Nell Matzen - 20 Aug, 2021

Australians still plan to enter the property market despite surging prices

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Australians still plan to enter the property market despite surging prices.

Data suggests that the Australian dream of owning a home is unwavering in the face of expert consensus that the housing market will continue to surge.

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National Australian Bank (NAB) Home Ownership Executive Andy Kerr said that the enthusiasm toward the property market and homeownership was at historic heights, with younger generations having the biggest appetite for getting into the market.

A survey from NAB revealed that 40% of respondents still believed that it was a good time to buy a property, with 15% planning to do so within the next year.

In the 18-29 age group, 18% of those surveyed said they were saving to buy a house.

Mr Kerr said that April was the strongest month on record for mortgages and was up 87% for the first quarter compared to the same period in 2020.

“That was up nearly 10 per cent on the last four months of 2020,” he said.

Woman moving into a new apartment

Where are Australians buying property?

Mr Kerr explained that regional markets were not immune to the boom, thanks to sea and tree changers leading to surging price rises in regional areas.

Buying trends in 2021 have been tilted toward value-seeking, with new, more flexible working conditions still driving buying activity.

The data showed that CBD apartments were also becoming increasingly popular as workers slowly return to the office.

First home buyers getting into the market

Mr Kerr explained that first home buyers are worried they will miss out on a property or be priced out of the market due to the continuing issue of housing supply. 

Despite these worries, Mr Kerr said that first home buyers were spurred on by government incentives like the First Home Loan Deposit Scheme and record-low interest rates. 

“People are realising it’s only marginally higher to buy a home than rent,” he said.

Even with all help available from the government, first home buyers will still have to scour the market for a bargain, with prices continuing to surge.

According to data from the Australian Bureau of Statistics, the national average price for a residential dwelling in June 2021 was $779,000.

A couple standing in front of their first home

Thanks to surging prices, as of July 1st, the government raised property price caps for the First Home Loan Deposit scheme.

  • NSW – capital city, regional centres (Newcastle, Lake Macquarie & Illawarra) $700,000
  • NSW – other $450,000
  • VIC – capital city, regional centre (Geelong) $600,000
  • VIC – other $375,000
  • QLD – capital city, regional centres (Gold Coast & Sunshine Coast) $475,000
  • QLD – other $400,000
  • WA – capital city $400,000
  • WA – other $300,000
  • SA – capital city $400,000
  • SA – other $250,000
  • TAS – capital city $400,000
  • TAS – other $300,000
  • ACT – $500,000
  • Northern Territory – $375,000
  • Jervis Bay Territory & Norfolk Island – $450,000
  • Christmas Island & Cocos (Keeling) Island $300,000

Mr Kerr applauded the government’s decision to raise the cap.

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Forecast for historically low-interest rates

Anyone looking to make moves in the property market may have limited time to take advantage of record-low interest rates, with banks beginning to raise their interest rates.

NAB announced in June that it was raising its two, three and four-year fixed loan interest rates by up to 0.1%.

Canstar’s Steve Mickenbecker said the raising of interest rates, although small, were indicative that the banks expected the Reserve Bank of Australia to raise the cash rate inside of the original three-year time frame.

“All of the big four banks still offer 2-year fixed rates below 2%, but Westpac is the only big four bank to offer a 1-year and 3-year fixed-rate home loan below 2%,” he said.

Couple receiving house keys from real estate agent outside new house

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Words by Nell Matzen


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