Property Brief - September 2023

In this edition of Property Brief, a marginal but very welcome increase in the number of home loan applications occurred during the first two months of Q3 2023. At an index value of 260, this key indicator of conditions in the property market is on par with Q3 2019, but still below the level of around 370 index points recorded in 2021. Now that the rate of inflation is coming down, there is increased likelihood of lower interest rates and this could propel the number of home loan applications higher.

Following solid growth in average home purchase prices in 2019 and 2020 (despite the Covid-19 pandemic), the growth trajectory started to flatten slightly, especially for first-time buyers. In November 2021, the Reserve Bank started raising interest rates and since then home purchase price increases have been even more muted. Owing to the resilience of the residential property market, we nevertheless witnessed record average home purchase prices in Q2 2023 for all buyers and first-time buyers.

With interest rates at 15-year highs, however, something had to give and a modest drop in average home purchase prices therefore occurred over the past two months. Compared to the same period last year, average home purchase prices are virtually unchanged, however, so any lowering of interest rates could spark expansion of this market.

In line with slower home price growth and as a result of higher interest rates, it is no surprise that average approved home loan values have dipped. This is closely associated with the increase in average value of deposits required for home purchases, which increased by more than 26% in the 12 months ending August 2022, and August 2023. Read more in the full version.

All the editions of the Property Brief are available here for your reading pleasure.