“We’re now starting to understand how it’s impacted property values”
The housing market has started to see the beginnings of a cooldown following the government’s March housing policy changes, and CoreLogic head of research Nick Goodall said that first home buyers have “benefited from the reduced competition” - however, despite price growth slowing down a little, the impact on prices has so far been minimal.
Goodall said that the Reserve Bank’s measures had also had an impact on the slight slowdown in activity, with fewer buyers able to access borrowing at higher LVR limits.
“For the first time in a while, we have a chance to breathe and take stock of where the market is at,” Goodall said.
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“This is probably similar to those in the market actually, as many people bide their time and assess both their own and the market situation before acting in what had been quite the frenzied conditions for both buyers and sellers.”
“We’ve previously noted the slight reduction in market activity off the back of tightened lending restrictions from the Reserve Bank, alongside concern about the government’s housing policy announcement at the end of March,” he explained.
“Now, we’re starting to understand how it’s impacted property values. The short answer is not by much - yet.
“We’ve seen a minor slowdown in the rate of growth in the market, with 2.2% growth over May compared to 3.1% in April. This is in line with our expectations, and is most likely due to the return of the tightened LVR limits, requiring a large deposit for investors.”
Goodall said that the new limits have cut down the number of investors able to drum up a large upfront deposit, and for first home buyers, this has proven to be beneficial.
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“This requirement has reduced the number of buyers able to stretch their finances to the elevated level of prices we’re now accustomed to, after watching the market growing by 20% over the last year,” Goodall said. “But importantly, there have been plenty of other buyers who had previously been unsuccessful step into the breach and ensure that values remain firm.”
“Investors’ share of purchases have dropped from their most recent peak of 41% in March, down to 36.6% in May 2021,” he added. “Meanwhile, first home buyers have benefited from the reduced competition, seeing their share of purchases lift from 21.1% to 24.6% over the same period.”
