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Owner-occupier lending takes a tumble

By Kevin Kelly

All eyes have been on housing finance data over the past few months, especially since the Reserve Bank of Australia (RBA) made the historic decision to reduce the cash rate in May 2015. A year later, it made the same announcement again – that the official cash rate would be lowered by 0.25 per cent.

At the time, this led the property market to have high expectations about what the future would have in store. With lending now more affordable, there was a strong chance that houses for sale in Bunbury could be snapped up by first-time buyers.

However, as the latest figures show, this hasn't necessarily been the case. Australian Bureau of Statistics (ABS) data reveals that lending to owner occupiers was down 0.6 per cent in trend terms over the course of May.

Why is lending down?

There's no real reason why lending has declined over the past few months. In theory, conditions should be just right for buying real estate in Bunbury – but the data suggests otherwise.

The ANZ-Roy Morgan Australian Consumer Confidence Index for the week to 12 July shows that people generally aren't as optimistic as they could be. Australians have, of course, had the impact of the federal election to deal with over this period, and not to mention issues in the wider economy.

It's also important to bear in mind that the RBA's latest cash rate reduction took effect in May, so it may take some time for this to be reflected in lending figures.

Is there any room for optimism?

Property analysts are hopeful that this will just be a temporary glitch and that there's some light at the end of the tunnel. Among them is the Housing Industry Association (HIA), which is hopeful for the remainder of 2016.

"With the federal election result now clear, potential homebuyers are likely to return to the market with a great deal more certainty," said HIA senior economist Shane Garrett.

"The prospect of another interest rate reduction later in the year will be welcomed by those looking to enter the market."

A pick-up in first-time buyer activity will be crucial to making sure the market stays on an even keel – and it will be up to lenders to make sure rates remain favourable.

Why do I need a real estate agent in Bunbury?

Whether you're a first-time buyer or a seasoned investor, make sure you speak to an experienced real estate agent in Bunbury. We're here to show you a selection of the properties that are on offer and ultimately guide you in the right direction.

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