Uncertainty in the economy has resulted in a stark drop off in home financing, with one of the country’s largest mortgage broking groups recording its lowest sales figures in January since 2004.
AFG’s January Mortgage Index showed just $1.3 billion worth of mortgages were processed last month – 40 per cent below the January figure recorded during 2010.
Queensland was the worst affected state, with the number of mortgages processed in January almost halving, compared to December.
The news was not much better in Victoria and NSW, with month on month sales down by 39.6 per cent and 31.8 per cent respectively.
AFG executive director Kevin Matthews said while the Queensland floods had dealt a significant blow to the local property market, the disaster has also affected sentiment across the whole country.
“In times of national crisis, people hunker down and put off major buying decisions,” Mr Matthews said.
“Additionally, consumer confidence is being adversely affected by the huge discrepancies between so-called experts on where property markets are heading. Some tell us real estate is over-valued by up to 40 per cent. Others are telling us we’ve hit the bottom and should expect prices to pick up. All of this is undermining the confidence of potential buyers.”