Borrowing enquiries up in Queensland and WA
An increase in mortgage enquiries coupled with declining property prices may point to a return of buyers and investors to Western Australian and Queensland.
For the year to July 2011, mortgage enquiries have increased from 16.7% to 18.5% in Queensland and from 11.6% to 13.5% in Western Australia as a percentage of all enquiries on mortgage comparison website Yourmortgage.com.au.
During roughly the same period, property prices have declined by 6.3% in Brisbane and by 4.7% in Perth, according to the June RP Data?Rismark Hedonic Home Value Index.
The drop in capital values has been coupled with rental yields in both cities remaining at or above the national average for capital cities, indicating there may be opportunities for investors.
The position of investors appears particularly strong in Brisbane, where yields for both houses and units are well above the national capital city average – 4.7% for houses compared with 4.2% nationally and 5.3% for units compared with 4.9% nationally.
Perth houses are yielding above average returns of 4.3%, while units are returning a yield of 4.7%, just below the national average.
RP Data senior research analyst Cameron Kusher says Brisbane units, which are currently valued at median price below $380,000 compared with a capital city average of $420,000, are looking particurlarly attractive to investors.
Rismark economist Christopher Joye also sees opportunities for investors: “Patient folks opportunistically investing in housing are probably going to find the best prices, and valuation fundamentals, that they will have had access to in a long time.”
“The Australian housing market’s demand- and supply-side fundamentals remain healthy. And they will improve further in the year ahead. The one fly in the ointment is interest rates.
“When the RBA comes to cut them, affordability in this country is likely to be the best we’ve seen in over a decade, which will help fuel a robust recovery and encourage investors to allocate scarce capital to boosting housing supply,” he says.
Analysis of the Yourmortgage.com.au statistics reveal that more than third of inquiries came from prospective NSW buyers, up 0.66% to 37.84%, while increases over this period were also recorded in the ACT (up 0.2% to 2.07%) and in the Northern Territory (up 0.55% to 0.99%).
The biggest drop in buyer activity occurred in Victoria, where mortgage enquiries declined by 3.39% to 21.8% over the course of the year.
The Melbourne investor market has been battered by the twin forces of declining property values and the lowest rental yields among all capital cities.
Melbourne property values have declined by 3.9% for the year to June, while gross rental yields stand at 3.7% for houses and 4.3% for units.