Australia's regional housing market is feeling the chill of the nationwide downturn.
After months of softer property prices in the capital cities, regional markets are now under pressure too, according to a new report from research firm Cotality. But brokers are finding ways to adapt, and capitalise, as the market shifts, with refinancing activity picking up alongside stronger demand for commercial deals.
"The conveyancers are feeling it, for sure. That's any buyers. But from a refinancing opportunity, it definitely hasn't slowed," Tara Gibbs, owner and mortgage broker at On Point Home Loans in regional Milton, New South Wales, told Australian Broker. "As for a broker, I'm seeing opportunities in refinancing, and more commercial and commercial lending."
Gibbs' experience points to a broader shift in regional housing activity, with the latest data showing the slowdown is beginning to show up in property values.
Dwelling values across regional Australia fell 0.1% in the three months to July, according to the latest Cotality Regional Market Update. The report found that growth slowed in 47 of Australia's 50 largest regional significant urban areas (SUAs), while 22 of them recorded a decline in home values. At the same time, the median time on market increased in 44 of the country's 50 largest SUAs.
"Relative affordability continues to attract buyers to many regional markets and support internal migration from the capitals. However, softer buyer demand is becoming more evident across the country, with fewer markets recording the strong growth seen earlier this year," said Cotality Australia Head of Research Gerard Burg.
The report found that Queensland's Gold Coast, Sunshine Coast and Cairns all recorded declines, 0.8%, 0.5% and 0.6% respectively, while regional NSW and Victoria had the weakest conditions around the country. Coffs Harbour (-3.3%), Goulburn (-3.2%) and Nelson Bay (-3.0%) led declines across regional NSW, while Geelong (-1.2%) and Warragul-Drouin (-1.5%) recorded the largest falls in Victoria. The exceptions were Western Australia and South Australia, where dwelling values increased 2.1% across both states.
But the slowdown has also spread to the broader housing market, with house prices in the nation’s capital cities falling 2.5% during the same three-month period.
Burg said higher interest rates and continued affordability issues are driving the slowdown. But brokers say there are other factors influencing the market.
"There's definitely a general uncertainty in the market," said Gibbs. "Everyone is just happy to sit and wait. Everyone is asking, is the bottom of the market or not? So I think people are willing to wait and see if it is at the bottom of the market before they purchase."
Donna Campbell, mortgage broker at Mortgage Choice South Morang in North Melbourne, added that fewer investors are also contributing to the downturn, as changes to negative gearing tax rules have reduced their presence in the market.
"The budget probably scared people off," she explained. "People are still looking. But obviously the investors have probably cooled off a little bit. And I think a few people are waiting to see what the market does, because everyone is saying the market is going to come down, the property prices are going to come down. So I think a lot of people are sitting on their hands, waiting to see how much it falls."
But the downturn in house prices hasn't translated to less work for brokers. In fact, quite the opposite.
"People in the market are shifting to refinancing or upgrading or downgrading, or commercial," said Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans.
Gibbs added that it's a good time to touch base with existing clients to "see where they're at."
"Everyone's got the time now to sit down and review what they've got and try to get into a better position," she explained. "I think that's where borrowers are getting more benefit from brokers. And brokers can see where clients are at and restructure things if they need to, or help borrowers with strategies to pay down their loans faster."
Beyond refinancing and commercial lending, Campbell added that HSBC's recent decision to exit the Australian market has created opportunities to help affected borrowers find new lenders.
"There's always something to do," she said.
