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Interest rate stability and improving economic growth should send more buyers back to the real estate market this spring, RP Data reported in its most recent blog.
“With interest rates looking stable and economic growth showing some improvement we may gradually see some improvement in housing finance numbers which ultimately points to an improvement in transaction volumes,” RP Data said.
“We are likely to see more new listings enter the market as we move into spring, so an uptick in buyer activity would be a very welcome event for anyone looking to sell their home.”
The blog was released before yesterday's higher than expected unemployment result of 5.3 per cent, for August, up 0.2 per cent from the month earlier.
RP Data said the trend in housing finance commitments has been reasonably flat over the first seven months of 2011 after trending down from a recent peak back in September 2009, the month prior to interest rates commencing their tightening cycle.
“The seasonally adjusted value of both owner occupier and investor loans in July 2011 (excluding refinances) was down by about 20 per cent from the September 2009 peak,” it said.
Based on buyer type and purpose trends, RP Data said the owner occupier market has remained more active than investors, with the value of owner occupier loans commitments (excluding re-financing) down by 1.6 per cent over the 12 months to July, while loans to investors are down 9.0 per cent.
Within the owner occupier lending segment, excluding a 30 per cent on-year rise in the value of housing loans being refinanced in July, “the value of loans for new home construction, the purchase of a new home and the purchase of an established home have all remained reasonably flat over the year to date.”
“The month to month movements in housing finance has seen loan values improve from the recent lows however. Owner occupier loans are up 5.9 per cent between March and July of this year, while investor loans are up 3.1 per cent between the April low and July this year.
“Investors now equate to 38.2 per cent of the value of all housing finance commitments excluding loans being refinanced.
“Investor loans have shown a greater level of decline compared with owner occupiers, which is typically the case when market conditions move out of the growth phase; investor numbers tend to taper as capital growth leaves the market.
"Higher yields, more stock to choose from and improved buying power hasn’t been enough attract a large number of investors back into the market.”