Local Mortgage Values and Home Prices Increase in Australia

Despite the decrease in the number of home loan approvals for January this year there are other hints that we could see a revival in the market soon. The value of home loans saw an increase of 2.4% according to data from the Australian Bureau of Statistics. Furthermore, a consumer confidence index showed that the public outlook has also improved, as other research shows that it reached two year highs in March this year.

One economist says that it was over confident to assume the recent rate cuts in December and October would be able to turn activity around so quickly suggesting that the consuming public needs a little more patience. While January 2013 figures may not have shown a direct improvement compared to December 2012 data the results were still 9.3% higher than they were in January 2012, which does offer some consolation and which many have taken as a step in the right direction. From this point of view the economy has already started 2013 in a high note, according to the economic optimists out there. For the analysts the most promising activity was the increase in the value of loans, especially after the contractions that took place in November and December, a sign of recovery and the increase in home prices has also fuelled optimism from some corners.

New research shows that average house prices in the December quarter were up by 3.8% compared to the three months before. This result came after the September quarter saw a 1% drop and the June quarter saw a 1% increase. Analysts from Bankwest Home Loans also took the opportunity to remind the public that the changes in the property cycle had made the climate conducive for good deals in a number of local cities, especially for those who wanted a step up for their family homes and those who are looking for online home loans at more competitive prices.

Hobart and Melbourne were singled out as cities that reflected strong and solid growth during the last quarter, as they attracted buyers from around the country due to their increased affordability while interest rates were dropped.

In January we saw more promising signs as home credit experienced a slight increase during the month and signalling that the pressure on consumers may be lifting a little. Loans to buy homes increased by 0.4%, an increase from the 0.3% growth figure that was documented for December 2012 but it is not as impressive as the 4.4% that was recorded for the same period 12 months ago which is where many analysts are sourcing their concerns for future growth prospects from.

The decision to maintain the cash rate at 3% has been taken in order to maintain the balance between the local currency and the country’s domestic growth rate.

In 2012 the number of active first time home buyers was still 17% lower than the average even though low interest rates were implemented between November and December. Furthermore, between 2000 and 2012 annual housing commitments found themselves at 117,686, also a lower than average performance.

Home value index results showed that five of the eight capital cities had shown growth for February this year. By the end of February 2013 the values of capital city homes increased by 0.3%, following a 1.21% increase for January.

Melbourne is said to have pushed the average up as the value of Melbourne dwellings increased by 1.5%. An increase of 0.1% was documented for Sydney, 1.9% was recorded in Canberra and 2.3% was documented for Darwin. The biggest monthly slump came about in Brisbane where home values dropped by 1.1%, following an increase of 2% in January.