Australian home buyers have taken a “pause” on the property market, choosing to stay on the sidelines until confidence returns, according to the nation’s largest body of mortgage brokers.
Many potential buyers are seeking advice from brokers but are holding off on applying for a mortgage as they digest federal property tax changes, according to Naveen Ahluwalia from the Mortgage and Finance Association of Australia (MFAA).
“Our members are telling us that investors are actually delaying decisions as they try to understand the recent fiscal implications,” Ms Ahluwalia told news.com.au.
“There is a lot of demand for advice from brokers at the moment and they are very busy supporting people in terms of, for example, what their employment looks like and access to government schemes.
“We’re seeing a lot of activity in the market, but in terms of that translating into loan applications, we’re seeing that it’s tapering off at the moment.”
Ms Ahluwalia believed the decline was temporary and not the start of a wider market collapse.
“We can definitely say that this is a pause. It will gain momentum. Markets are driven by confidence, and markets love certainty,” she said.
“The policy announcements and then the laws that needed to be passed obviously created an environment that was quite uncertain, particularly for investors.
“Now that we really have confidence in what that looks like, especially for investors and some of the other segments of the market, we’re confident that confidence will return.”
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It comes as confusion reigns between homeowners and potential buyers, with data showing falling prices and auction sales figures, while anecdotes from the field show competition is fierce and prices remain sky-high.
Depending on who you ask, the real estate market is either cooling quickly or preparing for another surge.
Some commentators argue that the market has entered a holding pattern, giving buyers a window of opportunity before structural pressures such as limited supply push prices higher again.
Others believe that the 30-year trend of rising property prices may finally be losing momentum, and the market will now move sideways for many years.
Deyon director Martin Eftimoski, a Sydney-based mortgage broker specializing in first home buyers, says the gloomy forecasts are overblown.
He told news.com.au this week he had not seen a drop in demand and remained “very busy”.
“I noticed some nervousness, like, ‘Is this the right time to buy or not?’ and then while people are looking, they see that there is a very high demand for the property they are interested in, and their fear just disappears,” Mr. Eftimoski said.
But Ms Ahluwalia said the MFAA’s experience was more in line with sobering data from Aussie Home Loans last week: a more than 20 per cent drop in applications from first-time homebuyers and a 25 per cent drop in investor demand since the Budget.
“I think these numbers are correct if we look at monthly trends,” she said.
Australia’s property market can create confusion because it is so segmented, with some cities performing better than others, she said.
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The country’s house prices are currently down 0.7% from their all-time high, according to the latest data from Cotality.
Sydney and Melbourne saw price declines of 3.7 and 4 per cent respectively, while Brisbane, Adelaide and Perth remain at record highs.
“From a data perspective, what we see at the national level is not necessarily reflected at the local level.
“It’s absolutely softening across the board, but you’ll see pockets that are holding really strong.
“However, at the national level, I think there is a bit of a slowdown in loan applications at the moment.”
HSBC chief economist Paul Bloxham took a gloomier view, saying on Tuesday that the continued fall in prices was “just the beginning.”
“With no rate cuts expected anytime soon (there is still some risk of another hike), we expect there will be no circuit breaker in the short term, meaning the house price correction is likely to continue for some time,” Mr Bloxham said.
He predicted a drop of up to eight percent by the end of 2027.
Other major banks ANZ and NAB are forecasting falls of around 10 per cent in Sydney and Melbourne over the same period.