New data has highlighted the challenge South Australian buyers face and revealed the growing gap between how much buyers can borrow and what they what they can actually buy across the state.
AFMS Group assessed five borrower profiles across ten lenders and compared estimated borrowing capacities against median house prices across 87 Australian regions.
Its research revealed where South Aussie buyers can get more home for their money, with regional SA offering buying couples the greatest purchasing power.
The Outback offers buying couples the biggest bang for your buck: Julie Fletche/SATC
According to the research couples could afford to buy in every suburb in outback South Australia – where the median price is $428,083 – without sending themselves into mortgage stress.
Couples looking to buy in the Barossa – Yorke – Mid North region – where the median is $596,164 – can buy in 99 per cent of the area’s suburbs, while couples looking to secure a slice of South Australia’s South East – where the median is $643,333 – can afford to buy in 96 per cent of the area’s suburbs.
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SA buyers have some choices. Picture: iStock
Adelaide’s northern and suburbs claimed spots four and five respectively, with couples able to afford to buy in 92 per cent and 71 per cent of all suburbs in those areas respectively.
Conversely, Adelaide – Central and Hills was SA’s most unaffordable region, with couples able to buy in just 55 per cent of all of the area’s suburbs.
Realestate.com.au senior economist Eleanor Creagh
Realestate.com.au senior economist Eleanor Creagh said prices had fallen for a sixth consecutive month in September, making home ownership easier for many.
“Higher interest rates are weighing on borrowing capacity and buyer demand,” she said.
“Sydney and Melbourne remain the deepest corrections, but downward momentum has strengthened in Adelaide, Brisbane and Perth, where conditions had previously been more resilient.
“The spring selling season has not delivered the usual lift in momentum. Auction clearance rates remain soft, homes are taking longer to sell, and sales volumes remain below last year’s levels.
“Together, these indicators point to weaker buyer demand and a widening gap between buyer and seller price expectations.”
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Ms Creagh said regional markets continued to outperform the capitals, while units were proving more resilient than houses as affordability shapes buyer demand.
“Further price falls are likely over the coming months,” she said.
“However, resilient employment, limited forced selling and homeowner equity buffers should contain the severity of the adjustment.
“Reduced buyer purchasing power remains the dominant pressure on prices, rather than large numbers of owners being forced to sell.”
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Loan Market credit expert Shay Waraker.
Loan Market’s October loan trends report reveals lodgements in SA have dropped 25 per cent since January, before the rate rise cycle began.
Credit expert at Loan Market Shay Waraker said buyers were likely being more cautious as property prices declined and interest rates climbed.
“With borrowing capacities impacted by increasing rates, buyers may be waiting to see if prices fall further before jumping into the market,” she said.
The biggest decline in loan lodgements was recorded among investors at 39 per cent, followed by owner-occupier upgraders (25 per cent – the highest of any state) then first-home buyers (10 per cent).
“When rates increase, there are two things we usually see: a decrease in new loan lodgements and an increase in people refinancing,” Ms Waraker said.
“After a rate hike, mortgage holders tend to look more closely at their loan – whether to see if they can find a more competitive deal or make some changes to free up cash flow.
“In this current climate, many homeowners are looking for some wriggle room in their budgets.”
The report comes as new research from Westpac reveals 38 per cent of South Australians are delaying plans to buy or sell because they are concerned about interest rates – a concern playing a greater role in SA than anywhere else in the country.
– additional reporting by Jessica Brown
