The average size of broker-originated loans increased across every state and territory in the March quarter, in line with a short-lived resurgence in housing prices, according to new data.
According to the latest mortgage and competition index from the Australian Finance Group (AFG) – which involved a survey of its network of 3,000 brokers – the national average loan size increased by 7.8 per cent in the March quarter of 2020, from $504,029 in the previous corresponding period to $543,425.
Loan sizes grew nationwide, with Victoria (up 9.7 per cent to $546,767), the Northern Territory (up 8.2 per cent to $438,664) and NSW (up 7.4 per cent to $665,586) recording the sharpest increases.
Western Australia (up 6.7 per cent to $460,806), Queensland (up 4.8 per cent to $461,899) and South Australia (up 4.6 per cent to $427,029) also recorded increases, albeit less pronounced.
This coincided with the rebound in residential property prices following a prolonged 18-month downturn.
According to the latest data from property research group CoreLogic, national home values increased 7.5 per cent in the 12 months to 31 March 2020, led by Sydney (13 per cent) and Melbourne (12 per cent).
However, analysts are expecting home values to slide by as much as 15 per cent over the coming months in response to the economic fallout from the coronavirus (COVID-19) outbreak.
According to ANZ Research, the recent decline in sentiment and the introduction of social distancing measures in the real estate sector have dampened interest in the housing market.
“The shutting down of auctions and open homes [is] very likely to put an end to that strong growth,” the research group noted.
“We suspect with these measures, many potential buyers and sellers will simply withdraw from the market until the virus is under control and social distancing measures are eased.”
Moreover, unlike some observers, ANZ Research noted that broader weakness in economic conditions would thwart a V-shaped recovery in residential property prices once current restrictions are lifted.
“Once the social distancing measures are removed, we think it is unlikely prices will simply bounce back,” ANZ Research noted.
“Despite enormous fiscal support, unemployment is still expected to rise sharply through this period and is unlikely to fully recover for some years.”
ANZ Research concluded: “This, with a possible reassessment of debt appetite, will likely result in a slow recovery for house prices.”
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