Tasmania mortgage demand outstrips NSW and Victoria

Demand in Tasmania in particular jumped +22.6 per cent.

Speaking to The Adviser, Equifax senior general manager of consumer products Angus Luffman explained that mortgage application demand in the state has seen a “big jump” from +11.2 per cent in the December quarter and +6.3 per cent in the September quarter last year.

“The mortgage application demand index has always been a lead indicator for house price growth in future quarters, and that's absolutely playing out, and we're seeing that in Tasmania so it's really strong growth,” Mr Luffman said.

“In recent quarters, the Index has shown mortgage demand growth in Tasmania, which we are now seeing filter through to house prices, with prices rising in Hobart by 8 per cent in December 2016 compared to December 2015. Based on the latest surge in demand we expect this upward trend in Tasmanian house-prices to continue,” he said.

“There's a level of momentum in the trend. Six, 11, and 23 per cent in the last three quarters. It would be unusual for it to sustain above 20 for very long. [But] at that velocity, for many quarters, even a couple of quarters in a row, it would be very unusual if all of a sudden it went back to being negative.”

ACT also experienced strong growth in mortgage application demand, which grew by 12.2 per cent.

This was closely followed by NSW (+9.1 per cent) and Victoria (+6.6 per cent).

Meanwhile, demand in South Australia only grew by 1 per cent and in Queensland by 0.3 per cent.

In Western Australia and the Northern Territory, demand fell by 12.3 per cent and 8.9 per cent, dropping for the third consecutive quarter. Western Australia in particular saw its sharpest decline yet, with applications down 1.7 per cent on the December quarter.

“The continued decline in mortgage applications in Western Australia and the Northern Territory, reflecting the economic downturns both states are experiencing, suggests that the downward trend will not abate anytime soon,” Mr Luffman said.

He highlighted that the Index acts as a lead indicator for house price growth in future quarters.

“We’ve seen some reasonable growth in ACT, NSW and then some softness in Western Australia and Northern Territory. So, what we see in mortgage application demand absolutely mirrors what you see in terms of different speeds and cycles of property and different locations,” he elaborated.

Looking at the statistics from a yearly perspective, the annual rate of growth in mortgage applications eased back slightly from +6.6 per cent in the December quarter to +4.3 per cent in the March 2017 quarter.

Mr Luffman clarified that despite the easing, he expects the rate of growth to remain stable going forward.

“We saw a jump in the fourth quarter last year, and although we couldn't necessarily see whether its investor or owner-occupier, there's other data that told us that that could be the driver,” he told The Adviser.

“If we look at the last six quarters, it's been in the range of +6 per cent to -3 per cent, and that's a fairly tight range generally, so I would be surprised if that trend was outside that range in the next quarter.”

[Related: Home loan demand surges in December]