Aussie reports record spike in pre-approvals

While the group has not released the actual figures in real terms, it noted that the month of August saw the highest volume of pre-approvals on record since 2014, with the figure more than doubling since 2018, according to the major brokerage.

According to the group, first home buyers (FHBs) accounted for more than half – or 53 per cent – of the pre-approval volumes across January to August. It added that pre-approvals in this segment increased by more than 130 per cent during this period, compared with the previous corresponding period.

Across the states, NSW recorded the highest pre-approval volume this year, followed by Victoria, Queensland and South Australia.

However, despite the increasing volumes in Victoria, there was a steep fall in the state recently amid the economic fallout from the second round of restrictions to curtail the second wave of the coronavirus.

Commenting on the data, Aussie CEO James Symond said the figures have illustrated that borrowers are becoming “better prepared” before buying property.

“There’s a strong indication that people are giving themselves as much certainty as they can in an uncertain environment,” Mr Symond said.

“And property seems to be where Australians seek that certainty to ‘bank on’ their future.”

While Mr Symond noted that the property market has been fluctuating in the wake of COVID-19, he said the spring season is usually the busiest time of the year for the real estate market.

“There’s a good chance that this year will not be any different given the record number of pre-approvals ahead of the spring property season,” Mr Symond said.

He added that as the property market remained restrained but steady across the previous quarter and as lower supply stabilised values, these market conditions could be ripe for FHBs in particular to secure a good deal.

“With interest rates at an all-time low and remaining low, there are people out there seeking the right opportunity,” Mr Symond said.

“More Australians are coming to terms with the new normal as it impacts their day-to-day. For some people, the savings from lack of travel and social spending means a portion of the market are now ready to act on their property dreams.”

In addition, Mr Symond added, government incentives over the past six to 12 months such as the First Home Loan Deposit Scheme (FHLDS), which only requires a 5 per cent deposit, could spur FHBs to enter the market.

“All eyes will be watching on to see what the spring property season will bring this year,” he said.

“Based on these record pre-approval volumes, many Aussies have got their finances sorted and are ready to buy when the right opportunity comes along.”