Home Buyers are walking away from the property market at a pace that threatens to further deflate property prices by at least 5%.
The number of new home loans approved by Australian lenders has fallen by 5.6 per cent to a 10-year low in February, after a similarly sharp decline in January.
We can not blame natural disasters exclusively for the decline in demand because the number of new home loans declined across all states. NSW experienced a drop of 10% – more than any other state.
While home buyers are backing away from the market, the volume of housing stock available for sale is growing. Figures compiled by property analysts SQM Research show there are now 356,600 properties currently for sale across the country, which is almost 50 per cent more than this time last year.
The drop in home loan approvals has more to do with the cost of finance, expectation of rate increases, as well as the difficulty to qualify for a home loan under the current credit laws.
The current drop in demand for property is more significant than that experienced in the midst of the Global Financial Crisis.
Mr Christopher said reported auction clearance rates of between 50 and 60 per cent in the major capitals could not be believed, since the results of half the houses put up for auction each weekend are not recorded. Many agents whose auctions doe not perform simply do not record the results.
The number of loans for new homes fell by 12 per cent in February and has dropped almost 36 per cent since the beginning of 2011.