FHB, investors ‘in prime position’: NAB report

The report combines insights from NAB’s group chief economist, Alan Oster, NAB’s head of behavioural and industry economics, Dean Pearson, as well as analysis from CoreLogic and mortgage brokers.

Additionally, the report found that rising rent values of 10 per cent in the year to September, plus gross rental yields nationally up 3.6 per cent from January to September could create “…opportunities for the investor segment of the market,” explained CoreLogic’s head of research, Australia, Eliza Owen.

These were just two of six “megatrends” — described as “powerful, transformative forces of change” by NAB and Advantedge broker distribution executive, and ex-Wallaby rugby legend, Phil Waugh — that formed a comprehensive overview of key market forces “…shaping the broker marketplace today and into the future”.

The report, released on Friday (21 October), also analysed the swift pace of activity extremes over the COVID period; evidence of a soft landing towards a predicted 2022/23 market value “floor”; fixed-rate loan expiry fuelling a refinance boom; and how a “digital revolution” is making end-to-end home lending as a process “…quicker, simpler and smarter”.

“The social and economic progression beyond Covid will likely extend to housing market conditions where transaction activity and price movements see less volatility in the years ahead,” Ms Owen commented.

“Tailwinds such as returning migration, high rental demand, strong mortgage serviceability and fewer listings may already be stemming property price falls.

“Surging home values in recent years preceding the current market slump means gains made through the upswing are unlikely to be fully eroded.”

Noting where loan demand could soon come from

Market megatrends 2022: Uncovering the opportunities for brokers “predicts” cash rate rises stabilising “…by the end of 2022 or early 2023,” thereby putting “… a floor on the current downturn in property prices,” — it discerning insights into why first home buyers (FHB) and property investors are in focus.

Vendor discounting from the listing price had increased to 4.2 per cent in the three months to September and time on market had increased to 33 days, up from a recent low of 20 days.

“These trends indicate a shift from a sellers’ market to a buyers’ market, which favours first-time buyers,” Ms Owen said.

“Falling home prices and extended government guarantees are supporting first-home buyers to take their initial steps onto the property ladder.

“Rising yields coupled with lower purchase prices could create opportunities for the investor segment of the market.”

Brokers to provide much-needed guidance

Structural changes in Australia’s property market have been rewriting the way brokers and customers approach home buying and lending, explained Mr Waugh.

“Overall, the housing market remains active, although growth is stalling,” he said.

“Dwelling values remain 22.4 per cent higher than the previous low in September 2020, despite a 4.8 per cent fall from the peak in April 2022.

“NAB’s latest figures show 44.2 per cent of home loans coming to NAB are from the broker channel, up from 40 per cent a year ago, while 55.1 per cent of NAB drawdowns originate from the broker channel.

“This is a material uplift and clearly demonstrates the strong and growing value of the broker proposition in an evolving environment.

“Brokers have risen to the task of guiding customers through structural shifts towards higher interest rates and cost of living pressures, which are unfamiliar territory for many borrowers.

“Despite falling property values, purchase prices remain high, and debt-to-income (DTI) ratios are still firmly in the spotlight.”

[Related: Property sales to weaken as rate hikes bite]