Buying preferences starting to shift back to NSW, Vic

Homebuyer preferences appear to be swaying again to the more expensive states of New South Wales and Victoria.

According to PRD Real Estate’s latest report, the Time to Buy a Dwelling Index showed a divergent trend in the intention of Australian homebuyers. While the index fell for all states over the year to June, Queensland and Tasmania reported more severe declines, down by 41.2% and 36.9%, respectively.

Over the same period, the decline was not as severe in Victoria and South Australia, which only posted falls of 1.2% and 9.3%, respectively.

Quarterly trends reveal an interesting trend: the index only declines in Queensland, Tasmania, and Western Australia, while increasing in New South Wales, Victoria, and South Australia.

“This increase has meant more buyers are contemplating to purchase in New South Wales, Victoria, and South Australia,” the report said.

The improved index for South Australia was due to its relative affordability compared to other states while the recovery in Victoria was likely because of its turning market.

“This was quite a significant result, as New South Wales and Victoria have historically been known to be the more expensive states compared to Queensland and Tasmania.”

Home affordability still declining

The latest PRD Real Estate report also shed light on how affordability continues to worsen, particularly among first-home buyers.

Over the first quarter of 2022, approved first-home buyer loans declined by 33.9% — a surprising finding considering the level of assistance from the government targeted to first-time buyers.

The decline in first-home buyer loans was apparent in each state, which the report finds as “unusual”.

Historical data showed that over the past five to 10 years, the more affordable states of Queensland, Tasmania, and South Australia were able to maintain the growth in the number of first-home buyers entering the market.

Meanwhile, the average value of home loans during the first quarter increased.

“A decline in first home buyer loans is a concern -- state and Federal Governments may introduce more grants and schemes directed to assist first home buyers further, to stimulate demand,” the report said.

“With supply still lagging, this can deepen the current imbalance, thus stimulating higher property prices.”

Overall, Australia’s home loan affordability index declined by 7% over the 12 months to the March quarter at 26.8 points, reflecting the spike n property prices across capital cities and regional markets.

Of all states, affordability declined the least in Victoria and the most in the ACT and South Australia.

“Different markets are now moving at different speeds and creating an increasingly different property market for Australians,” the report said.

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