A growing number of property buyers are snapping up more expensive properties in capital cities amid predictions that value will double over the next 10 years.
The latest data from Loan Market showed mortgage demand from borrowers buying top end properties jumped by 30% over the past 12 months. The report also found a dramatic increase in borrowers seeking loans in excess of $800,000 and those who are borrowing more than $3 million.
"There is strong evidence that the prestige property market is on the move and people are on the hunt for homes worth more than $1 million," said Dean Rushton, Loan Market chief operating officer.
Rushton said the one percentage point increase in official interest rates over the past six months had not deterred some people from seeking to upgrade their properties.
"There is confidence out there about both the direction of the Australian economy and the housing market, which is encouraging those with financial stability to upgrade their homes. Buyers are recognising that there is a lot more opportunity now to get into the top end of the market and achieve benefits in the long term," he said.
Because upgraders and investors tend to have larger amounts of equity built in their existing properties as well as a clean track record, they are generally viewed more favourably by lenders and are not subjected to the tougher lending criteria as the ones imposed on first homebuyers by the major banks.
Rushton added that those making a move now on a prestige property could certainly realise significant gains if the predictions that median house prices in most capital cities will double by the end of the decade due to population growth will occur.