The further interest rate cut offered by the RBA on the 7th of May has done little to encourage borrowing activity in Australia. Michael Yardney for the Property Update reports that despite luring circumstances, the mortgage market is not as active as it was before the Global Financial Crisis.
Doomsday predictors are never short on work- after all, rumour mills work overtime. However, those who have predicted a crisis will only agree that the real estate market is going strong, quite strong. People are still borrowing amounts pretty close to what they borrowed in peak years to fetch properties in Australia. Annual borrowing for residential mortgage shows a steady picture. Michael Matusik from Property Update rightly points out that all three types; the first home buyers, second + buyers and investors are showing strong signals.
For first home buyers;
- Nearly 100000 of them bought their homes last year.
- Average mortgage for first home buyers is only about $12000 short of overall mortgage borrowings.
- First home buyers called a debt of $28 billion upon themselves. This is roughly 1/7th of the total borrowing.
For second+ buyers, the borrowing figure is $88 billion, about $4 billion in excess of Investors and three times the figure for first home buyers. Trading volume is only 5% lesser than what it was during the peak time.
Investors have worked up a debt of $84 billion, holding roughly 42% market share in the year 2012.
The investor market is bound to gather further momentum, while the first home buyers’ market will play second fiddle and in all earnest, there won’t be a property bust any time soon. You can read the original article here.