Property Market – Page 44 – Digital Finance Analytics (DFA) Blog

Property In The Record Books For All The Wrong Reasons

We look at the “property experts” view of the markets, which appears to be on the turn.

Domain published an interesting article before Christmas, looking in particular at the Sydney property market, saying its one for the record books. To which I respond, maybe, but for all the wrong reasons.

Sue Williams wrote: Space: the final frontier – or, for those in the Sydney property market over the past year, the financial frontier. For the biggest trend in pandemic-plagued 2021 has turned out to be the demand for more room in, and around, our homes.

“It’s really been the year when we re-imagined the space in our houses and apartments,” says Domain chief of research and economics Nicola Powell.
“We wanted to have areas in our homes where we could work and, spending so much time indoors during lockdowns, we wanted more living space where we weren’t all on top of each other.

“That’s really driven a lot of the price growth of houses over that of apartments. But another big surprise of the year has been the price growth of three-bedroom units. Generally, the greater number of bedrooms, the more prices have risen.”

It’s been a strange year in so many ways. With rock-bottom interest rates continuing, no sooner did escalating property prices smash all previous records than they smashed them again three months later – with unprecedented back-to-back quarters of price rises over eight per cent.
As first-home buyers flooded back into the market in 2020, they were suddenly washed back out again by the pricing tsunami, with investors diving in to take their place.

Many were only able to dip their toes in early in 2021 because of the bank of mum and dad.

Go to the Walk The World Universe at https://walktheworld.com.au/

Why Central Banks Cannot Let Home Prices Slide!

Central Banks have created a monster, thanks to ultra-low interest rates, easy lending rules, and backed by Government stimulus. That monster is high house prices, the growth of which has accelerated through the Pandemic, with New Zealand, Australia, and the UK at the top of the charts.

As a result, banks have lent big, with larger mortgages and a greater share of lending going to the housing sector. APRA recognised the risks in mortgage lending by lifting the so called buffer rate back in October, reducing the amount borrowers can obtain, by a maximum of around 6%. It is obvious risks are rising, as now interest rates are turning higher – the Bank of New Zealand has already lifted strongly, and the Bank of England lifted this past week.

But that creates a problem, in that of home prices start easing, the so-called wealth effect is reversed and people spend less, while if prices slide the banks’ balance sheets get hollowed out and more capital which is costly is needed, to the point they might ease back on new lending.

And of course, for first time buyers who have recently grabbed larger mortgages, negative equity haunts as an outcome. So, we think Central Banks will do their most to try to keep prices up, and growing, despite the debt overhang.

The UK is a good case study. U.K. house prices probably will struggle to rise in 2022 after two strong years of increases, one of the nation’s largest mortgage lenders said.

Go to the Walk The World Universe at https://walktheworld.com.au/

Data Analytics & How It Can Help You Make Better Property Decisions (with Martin North)

Headlines dominating the property news always use two powerful words to grab the market’s attention: BOOM and DOOM. But how can you see through the data and make better property decisions based on it? Today, we have data guy and host of Walk the World Martin North to talk about the world of data analytics and the importance of data-based decisions. If you enjoy the show, do like, rate, subscribe, and share it with others!

Episode Highlights: ● “The House on the Rock” [02:50] ● The 40% drop in Australian property prices explained [04:15] ● Events that may lead to significant losses in the property market [09:49] ● How can first home buyers use data from granular level research? [13:56] ● Taking a look at mortgage stress [15:45] ● Socio-economic factors that may affect mortgage stress [20:26] ● The importance of seeing through the property data presented [26:29] ● Martin’s observations of the property market industry [29:21] ● What if you bought a property that wasn’t quite right? [33:02] ● What’s the REAL definition of affordability for first home buyers? [35:53] ● Borrowing less than what your bank can lend you [40:04] ● More people who are heading to retirement have mortgages [44:42] ● What should first home buyers know about agents? [50:36] Links from the Show: ● Walk the World YouTube Channel https://www.youtube.com/c/WalkTheWorl… ● Is Australia Ready to Reopen? – Brendan Coates https://www.theelephantintheroom.com….

About Martin: Martin North is the founder of Digital Finance Analytics, a boutique research, analysis and consulting firm that specialises in offering insight into the dynamics of the mortgage, lending, savings, payments and superannuation sectors.