Mortgage volume increase points to South Australian recovery

Mortgage volume increase points to South Australian recovery
Zoe FieldingDecember 7, 2020

Mortgage volumes increased around the country in February, particularly in South Australia, suggesting that state’s property market is recovering after a sluggish few years.

Mortgages processed in South Australia by Australia’s largest mortgage broker, AFG, increased by 31% in February compared with the same month in 2014.

Around the country mortgage volumes were up 16% compared with the same time last year and up 58% compared with January, the broker reported.

“February is the real start to the mortgage year and overall we’re off to a flying start this year,” AFG general manager of sales and operations Mark Hewitt said.

“No doubt the February rate cut has made borrowers more confident, but it’s important to recognise the significant variations from one state to another.”

Mortgage volumes processed by AFG in February were up in NSW by 25%, in Victoria by 21% and in Queensland by 15%. The broker processed 4% fewer mortgages in Western Australia compared with the volume processed in February 2014.

The Australian Bureau of Statistics will release official home finance figures for January on 11 March.

South Australia’s strong growth in mortgage applications follows a pick-up in the state’s property market in the December quarter of 2014, as highlighted in an analysis by the Real Estate Institute of South Australia.

The Valuer General’s median house price in Adelaide hit $425,000, while the state median price was $390,000, REISA reported.

REISA president Greg Moulton said the latest figures showed a 3.16% increase in the state’s median property price over the September quarter and a 3.91% increase in median price compared with the same period of 2013.

“The change in median price over the last few quarters is fantastic and shows quite clearly the underlying strength of the property market,” Moulton said. 

“The other great figures are that the volume of sales increased for both South Australia and metropolitan Adelaide in 2014 compared to 2013. There was an increase of 2.63% in volume of sales across South Australia and 2.4% across metropolitan Adelaide,” Moulton said. 

However, South Australia’s market still faces headwinds. The capital gains and sales volumes it has posted are considerably lower than those in the Sydney and Melbourne markets where homes appreciated in value by 12.4% and 7.6% respectively through 2014, according to Corelogic/RP Data.

Property valuation and advisory group Herron Todd White noted in its March review that: “Adelaideans are traditionally very conservative and local economic factors, cost of living expenses and job security at this time is playing a significant role in holding back [Adelaide’s] market.”

Herron Todd White did not expect the interest rate cut to have much of an effect on Adelaide’s property market, although it noted investors may be spurred into action by the expectation of a further 25 percentage point rate cut.

“The feeling was that increasing investor activity during 2014 has played a significant hand in the steady ongoing recovery of [Adelaide’s] housing market,” the review noted.

It added: “Generally Adelaide investors are most active in the sub $500,000 segment and we believe that sales activity in this price bracket may improve during 2015 and as a direct result there may be a slight improvement above what is expected in capital growth. However at this stage we don’t believe that it will be significant … We believe that overall during 2015 our market will continue on its path of steady recovery and translate to between 3% and 5% in capital gain for the calendar year.”

Zoe Fielding

I am a freelance journalist and editor with more than 15 years experience specialising in personal finance, property, financial services and financial technology. A skilled writer and researcher, I have extensive experience producing high quality content for corporate and media clients. I am used to working to tight deadlines and tailoring the pieces I produce to suit a variety of audiences and formats.

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