This Week in Real Estate: Property news that you can trust
Banks Slash Loan Approval Times
The four big banks have taken drastic measures to reduce home loan approval times to support the booming residential property market. Major lenders are now claiming turnaround times of two days, at most, for straightforward loans.
This increased pace of decision-making will allow for more first-time homeowners to enter the market which is a far cry from the bottlenecks in the approval process following the Hayne royal commission. The banks claim their streamlined process allows them to make decisions faster.
ANZ, Commonwealth Bank, National Australia Bank, and Westpac have all revealed that their turnaround times for home loan approvals had plunged to as low as a day for existing customers who are earning a regular income.
A report from the Financial Review shared a recent statement from National Australia Bank CEO Ross McEwan informing the house economics committee that NAB could give “vanilla” home loans a green light in as little as 24 hours. According to McEwan, “For a simple home loan, through one of our branches, 50% are [approved in] less than a day, and the other 50% are less than five days”.
Sales Of New Homes Up 90%
New home sales have heavily increased by 90%, the second strongest monthly result since 2004, as buyers rushed to take advantage of the final phase of the HomeBuilder grant before the scheme was over.
An identical buying frenzy that was recorded last December, had pushed the monthly result up by 92%. This is a near-record amid the rush to get the full $25,000 HomeBuilder grant before that stage of the stimulus ended.
HIA economist Angela Lillicrap says, “This same effect was evident in March as households raced to get access to the $15,000 grant”. She further states that “HomeBuilder, combined with changing population dynamics and improving market confidence, led to strong sales through to the end of 2020”.
The reduced HomeBuilder grant ended on March 31 but with a 12-month extension made by the Federal Government for work to start on dwellings contracted under the program. The HIA believes the extension will unleash an unprecedented national surge in housing construction, with every state booming above its previous peak.
ANZ More Bullish Than Other Banks
ANZ Bank chief executive Shayne Elliott has given an upbeat assessment of the bank’s confidence and greater expectations of the Australian property market, sticking to the bank’s property price growth prediction of 17% this year. This is a stark comparison to the 10% property price boost the other three big banks foresee this year.
Elliott does warn that regulators need to watch price movements and lending standards closely but that there should be no cause for alarm. According to Elliott, “We agree that price increases need to be watched and credit standards maintained to ensure the financial system remains stable”.
Elliott further states that ANZ has been assessing its customers based on their ability to pay higher interest rates in the future.
CBA boss Matt Comyn has also expressed similar sentiments and has noted that the bank is “not overly concerned with what we are seeing at the moment in the context of financial stability”. The bank’s confidence is affirmed by the mix of buyers, with owner-occupiers which currently make up 75% of the applicants.
Investors Shrug Off Virus Negatives
In a recent survey given by Momentum Wealth, seven out of ten property investors expressed confidence in the real estate market, despite the pandemic, with thriving properties highest in Brisbane and Perth. The survey had asked 460 property investors which city they believe is the best location to purchase an investment property.
The responses to the survey also showed investor confidence, with almost 70% of the respondents claiming the pandemic had not impacted their plans to invest. Furthermore, 16% claim that the pandemic had even increased their likelihood of investing.
Jennifer Wakeman, general manager for Momentum Wealth, says Australians have a natural affinity for real estate. This is driven partly by the market’s long-term performance. Buyers have benefitted from stimulus measures that are designed to help reduce the economic impact of the virus.
According to Wakeman, “Job losses have largely been confined to a few industries and most of these jobs have since been recovered”. She further explains, “The strengthening economy has also led to many people being in a better financial position than was first predicted”.
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Clearances Rise As Boom Continues
This week, capital cities had seen a slight improvement on combined recorded preliminary clearance rates since Easter.
With the 2,448 homes taken into auction this week, the preliminary auction clearance rate was 80.5%, according to CoreLogic’s Property Market Indicator. This increase, compared to the previous week’s 2,199 auctions at 79.4% (which was then revised down to 76.8%), is proof that the clearance rates continue to bounce back from the Easter slowdown.
At the same time last year, only 30% of homes were sold across 1,922 auctions. This confidence low, along with restrictions around onsite auctions and physical home inspections, disrupted activity.
Recorded last week was Canberra’s highest preliminary clearance rate at 87.4%. This is followed by Sydney with 84.8%, Adelaide with 82.8%, Melbourne with 78.1%, and Brisbane with 72.7%.
Melbourne saw the highest number of auctions over the week with 1,204, followed by Sydney with 913, Canberra with 112, Brisbane with 104, Adelaide with 81, and Perth with 30.