Cotality head of Australian research Eliza Owen had expected the Reserve Bank’s three rate cuts this year, to a cash rate of 3.6 per cent, to have a stronger impact on the higher end of housing market values.
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“But it’s less surprising when you think about it from an affordability perspective, where people are able to buy into the Sydney market, and how separated average incomes have become from many property markets in Sydney,” Owen said.
She noted a similar affordability trend in Melbourne. “Again, it’s a reflection of buyers being skewed to the lower end of the value distribution,” she said.
Owen said that as property prices had risen faster than incomes, a higher portion of potential buyers across the income spectrum were looking to an increasingly small pool of buying opportunities.
“This is most rapidly pricing out lower income households, who then find themselves in the rental market for longer.”
Owen said there had been an increase in rentvestment over the past year in NSW as buyers purchased an investment property where they could afford and rented a home where they wanted to live. Almost 10 per cent of first home buyer loans were for investment properties in the most recent ABS figures, she said.
Separate figures from Domain showed almost one in 10 potential buyers in NSW was searching for a property in Victoria, although the reverse was also true.
Among NSW users of domain.com.au, 9 per cent of property searches this year were for Victoria, and 6.9 per cent for Queensland, Domain’s End of Year Wrap report, also released on Thursday, showed.
Among Sydney potential buyers on the site, 25.3 per cent of enquiries were for homes in regional NSW.
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Victorian users performed 9 per cent of their searches for NSW, 4.6 per cent in Queensland and 3.6 per cent in Tasmania.
Melburnians made 27.6 per cent of their enquiries to regional Victoria.
Domain chief of research and economics Dr Nicola Powell thought the cross-border buyer interest could be due to the rise of the rentvestor as they tried to get onto the property ladder. Others were looking to purchase a home and relocate, she said, while others were investors.
“At its heart it’s driven by Australians seeking the need for affordable housing and often that comes with hopping over a border,” she said.
Job opportunities, lifestyle and being closer to family and friends can also prompt moves, she said. Some migrants to Australia may move to Sydney, stay there for a period and then move elsewhere, while buyers may choose Queensland for the lifestyle, or Melbourne for the job prospects and a cheaper cost of housing relative to Sydney.
East coast buyers had also been looking for homes in WA after its property boom over the past few years, she said, although this was starting to ease. Among NSW property seekers, 1.9 per cent of searches were for Western Australia this year.
“We know that because investors chase capital growth,” she said. “It’s been our previous quiet achievers that have seen the strongest rates of growth … I do think it’s starting to slow down.”
