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It seems there's no stopping the march forward in the Australian property markets.
- While housing loans fell in December, strong annual growth remains
- Solid lending activity is helping to prop up the property market
- First home buyers and investors are boosting demand
"We do expect housing prices to continue to rise by about 6 per cent in capital cities through 2024 – more in places like Brisbane, Adelaide and Perth," ANZ senior economist Adelaide Timbrell says.
Data from the Bureau of Statistics confirmed a still healthy appetite from home buyers for finance.
"While the value of investor and owner-occupier loans fell in the month of December, through the year growth was 20.4 per cent for investor loans and 7.4 per cent for owner-occupier loans," ABS head of finance statistics, Mish Tan said.
Adelaide Timbrell says the forces pushing property prices higher remain strong.
"Over the next six months the big issue in the property market will be undersupply."
"We've got really low rental vacancy rates, we've got really weak building approvals through 2023, and what that means is that there's lots of people who need homes and not a lot of homes that are going to be for sale or for rent.
"What that does is it pushes up prices both for renters and prospective buyers," Timbrell says.
And CoreLogic's head of research, Tim Lawless, says while the 0.4 percentage point rise in national property values in January may seem subdued, in dollar terms, it still represents an enormous flow on money into the Australian property market.
"In dollar terms, that means housing values, just over the month, have gone up about $3,000."
There are other trends in the new ABS data worth noting too, like the increasing proportion of investors buying properties.
"The proportion of loans to investors has increased from 27.3 per cent in December 2019, to 35.5 per cent in December 2023," Tan said.
And while finance to first home buyers fell away in December, it's proved remarkably strong in recent months.
"The number of first home buyer loans fell 8.4 per cent in December 2023 but was 12.9 per cent higher compared to a year ago," the ABS noted.
Meanwhile, the value fell 5.5 per cent in the month but was 21.0 per cent higher compared to a year ago.
"I mean just over the past year we've seen first home buyer lending – the value of – is up 21 per cent, compared to non-first home buyers up 7.4 per cent, so first home buyers are over-represented in the marketplace at least based on average levels at the moment," Lawless said.
"They compromise about 29 per cent of [overall] owner-occupier demand."
The 10-year average is about 24 per cent.
Tim Lawless suggests first home buyers are working extra hard to get a foot on the property ladder to avoid soaring rental costs.
However, he says, the first home buyer demand is likely backed by the financial support of wealthier parents.
"It's not one of the official stats coming out of the Bureau of Statistics, for example, so it's hard to measure but, anecdotally, and on that old gut feel, you'd have to think there's some truth to that theory that there is some generational lending helping first home buyers get into the marketplace.
"If you are in a situation where you do have a wealthy benefactor – maybe your mum and dad – and they're willing to help you out to get into the marketplace then I'm sure people are going to be taking advantage of that."
For those without the bank of mum and dad, the road to saving for a first home is a long one.
"Just at a national level, [it's going to take you] more than 10 years [without financial help] to save a 20 per cent deposit and that's if you can save 15 per cent of your gross income, year on year," Lawless said.
Adelaide Timbrell agrees it remains a very challenging environment for first home buyers.
"Housing prices have risen way more than household incomes over the past 15 years."
"Average loan sizes are big, the average deposit you need is really big as well, and the average amount you can save has gotten smaller over 2023.
"So there's a lot of challenges that make it really hard to crack into the market and that's why, compared to 10 to 20 years ago, there are fewer people under 35 who own a home," Timbrell said.
On the positive side, the ANZ economist says there is evidence wages growth is picking up, inflation is falling and unemployment will remain low.
These are all positive developments for working Australians trying to make ends meet.