How the Reduction in Loan Deferrals is Influencing Property Demand

Industry News, Sales,  Buyers and sellers,  Principals,  Salespeople

Recent data released by the Australian Banking Association reveals that Australia is experiencing a huge reduction in loan deferrals. The number of deferred loans has seen a reduction of almost 70% since the peak of the pandemic. This is positive news for the real estate industry, as more Australian’s are looking to invest in the property market.

Most Queenslander’s who were provided with a loan repayment deferral scheme throughout the pandemic, have now returned to their existing principal and interest payments. Not only this, but Queenslander’s are paying their loans off at a steadfast pace.

“We’ve found that most Queenslander’s have recovered from the financial strain of the pandemic and are starting to pay off their debts again. We’ve also found that people are wanting to pay off their loans a lot faster,” says Rohan Buckley, Mobile Bank Manager at Auswide Bank.

“This has a lot to do with the increase in Queenslander’s disposable income as they spend less on dining out, travelling overseas and even locally, as they are working from home.”

The Shift From Renting to Home Owning

Since the number of loan deferrals have reduced, we have seen a significant uplift in demand for property across the state. This is supported by the stable market conditions and low-interest rates. The current conditions are particularly appealing for first home buyers, who are also able to take advantage of various government incentives.

“We’ve seen a big shift in people wanting to purchase their own home instead of renting, especially in the first home buyers space. When you’ve got home loan payments that are similar to rental prices, why wouldn’t you be paying off your own home?” says Buckley.

We have seen the cost of mortgage repayments become increasingly more affordable in some areas, including Gladstone.

“There are areas across the State where mortgage repayments are actually lower than rent levels,” says Antonia Mercorella, Chief Executive Officer at the Real Estate Institute Queensland.

“With interest rates at record low levels, a range of first home buyer grants available (for those using the deposit grant to bolster their existing savings or the deposit scheme with only 5% deposit requirement). This could help more renters transition to homeownership which is a great outcome for Queensland.”

Become an REIQ Member

The Need For Established Housing Support Measures

Purchasing your first home can be made easier with government incentive schemes such as the First Home Owners’ Grant and the HomeBuilder scheme. However, as demand for property increases, housing affordability unfortunately decreases.

The RBA reported that the cost of new construction has increased by 220.3% between 1994 – 2018. While established housing has only increased by 113.95% for the same time period. Therefore, if the first home buyer schemes aren’t extended to established housing, it’s likely we will experience artificial price hikes. This will make it increasingly difficult for buyers to purchase property.

“Any stimulus measures for the property market must support the whole of real estate for the benefit of all Queenslanders. This includes providing access and choice in established housing,” says Mercorella.

“By doing so, it will help drive consumer confidence upward and accelerate our economy. It will also increase the labour market across both construction and real estate, two of Queensland’s largest industry employers.”