Home loan affordability improved in Victoria as locals began packing their bags and moving interstate.
Bluestone Home Loans’ latest report showed that affordability improved in Victoria over the October quarter, which was due to the easing demand from local buyers who started to move interstate following the lift of the pandemic restrictions.
Bluestone Home Loans consultant economist Andrew Wilson said the easing of recent severe covid lockdown restrictions reactivated impeded home buyers.
“The recent mass interstate exodus by Victorians is continuing, with annual totals now at the highest levels since the recession of the early 1990s,” he said.
Figures from the Australian Bureau of Statistics (ABS) showed that Victorian net interstate migration fell by 18,300 over the year ending June 2021, the lowest result since the year ending September 1995.
Furthermore, Victoria reported the highest loss in total net migration over the year ending June 2021 - down by 74,388.
“The cyclical cooling of housing markets, particularly in Sydney and Melbourne will likely result in lower home lending activity overall – and well below the levels at the peak of the home loan boom earlier in 2021,” Mr Wilson said.
Mr Wilson explained that short-term sharp shifts in migration have implications for housing markets, particularly on the demand which, in turn, impacts rents and prices.
“Opening borders and a rapid reintroduction of mass international migration (notwithstanding further COVID outbreaks) will, however, provide a significant demand source that will act to reinvigorate housing markets generally over the medium-term,” he said.
Overall, home loan affordability improved across all states, with Bluestone Home Loan Affordability Index showing a quarterly growth of 0.4%.
On an annual basis, however, home loan affordability still has fallen sharply by 14.3% as a result of rising house prices and the growth in the average loan size required by buyers.
Victoria, South Australia, and the ACT reported improvements in affordability over the quarter. On the other hand, New South Wales and Queensland witnessed their respective declines in affordability moderate over the period.
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