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Australia has ended the first six months of 2007 with a positive coast-to-coast outlook for property markets, according to recent figures out from Australian Finance Group (AFG). AFG Mortgage Index shows that the average Australian mortgage size – a reflection of property prices and confidence – increased 5.6% from $300k in December 2006 to $317 in June 2007.
This increase was mainly fuelled by the growing, resource-fuelled WA market, where average mortgages rose a massive 13.5% from $325k to $369k in the six month period. But recovery is also underway in Victoria, where average mortgages grew 7.4% from $268k to $288k. In New South Wales, average mortgages rose from $376k in December to $382k in May, although there was a fall back to December levels during June. Queensland has seen a steady growth of 2.8% in the six month period, with average mortgage sizes increasing from $282k to $290k.
According to AFG, while it started the year with a two-tier mortgage market, its brokers are telling AFG that growth in WA is slowing down to more sustainable levels, while in New South Wales, and to a lesser extent Victoria, recovery is underway. AFG expectations are that these trends will continue in the second half of the year. But AFG also expect an increase in Fixed Rate Loans as concerns about a widely-forecast rate rise take hold.
Currently, 20.4% of all mortgages sold by AFG are Fixed Rate, down from an all time high of 25% recorded last November, but historically still at a high level. This figure is expected to rise again if upward pressure on interest rates continues.
Property investment continues to be better in WA where AFG sells 44.8% of all new mortgages to investors. This figure compares to 34.8% for Queensland, 31.5% for New South Wales, 24.9% for Victoria and 27.1% for South Australia.
21-Aug-2007
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