Qld races ahead in property settlements: PEXA

Digital property settlements platform Property Exchange Australia (PEXA) has released its Property and Mortgage Insights Report – East Coast for the 2021 financial year, which showed that Queensland was the standout performer among the eastern states, with property sale settlements rising 37.1 per cent to over 203,100 in FY21.

NSW recorded the highest settlement volumes in the east coast of almost 218,700, marking a 25.8 per cent rise, while Victoria lagged behind at almost 199,000 settlements, representing an 11.7 per cent rise.

Queensland also recorded the largest rise in the total value of sale settlements in FY21, with the value jumping by 44.3 per cent to $106.8 billion in FY21.

Total sale settlement values rose by 26.7 per cent in NSW to $186.3 billion in FY21 (the highest total value reflecting the higher property prices in NSW), and only by 7.7 per cent in Victoria to $127.4 billion, which the report attributed to the impact of the second lockdown to curtail the spread of the coronavirus.

Sale settlement volumes grew significantly year-on-year in all three states, with Queensland and NSW seeing growth across all months of the year, culminating in May 2021, where both states were up over 70 per cent year-on-year, the PEXA report showed.

The report also revealed that Victoria recorded four months of negative growth in the first half of FY21, coinciding with the second lockdown, but the state recovered quickly after restrictions were eased.

In Queensland, regional settlements comprised 55.4 per cent of overall settlements in FY21, compared with 44.5 per cent in NSW and 34.2 per cent in Victoria.

Queensland recorded nearly 102,000 regional sale settlements, while NSW recorded 87,000 settlements and Victoria recorded 59,000 settlements.

In Queensland, settlements growth came largely from the Greater Brisbane area in FY21, which was up 51.9 per cent.

PEXA’s research revealed that in Victoria, the growth in settlements in Victoria was driven entirely by regional areas, where settlements grew by 28.0 per cent. In contrast, settlements declined in Greater Melbourne by 2 per cent year-on-year due to the impact of the second lockdown.

The report also revealed that regional buyers were less likely to fund their purchase with a loan, with around 66 per cent of regional settlements having a new loan, compared with 80 per cent of capital city property sale settlements.

This was attributed to metropolitan home owners moving to regional areas to capitalise on lower-priced properties, flexible working arrangements amid the coronavirus pandemic, and a desire for a change in lifestyle.

Loans for settlements in regional areas grew more quickly than capital city areas in FY21, the figures showed.

While new loans were up 15.9 per cent in Sydney and only 2.1 per cent year-on-year in Melbourne, regional new loans in NSW were up 38.8 per cent, and in Victoria, they were up 35.2 per cent.

New residential loans increased by 22.3 per cent in NSW and 3.4 per cent in Victoria in FY21, while new commercial property loans were up 36.8 per cent in NSW and 35.3 per cent in Victoria, PEXA reported.

Residential property buyers were more likely to take out a loan compared with those purchasing commercial property.

For example, the figures showed that in Victoria, 77.5 per cent of residential property purchases were funded with a loan, compared with 70 per cent of commercial loans.

This gap widens in NSW, where 75 per cent of residential property purchases were funded with a loan, compared with only 58.1 per cent of commercial property loans.

In Queensland, 73.7 per cent of residential property purchases were funded with a loan, compared with 71 per cent of commercial loans, the report revealed.

Additionally, the report revealed greater consumer preference towards the major banks for new loans in NSW and Victoria, with the big four banks securing over 1,850 more new loans in May 2021 in Victoria.

However, non-major banks grew their positive net position in Queensland during the second half of 2020 and into 2021, particularly Suncorp and Bank of Queensland, the research showed.

Commenting on the research findings, PEXA senior research manager Mike Gill said: “The sunshine state has had an incredible year in property, with Greater Brisbane jumping more than 50 per cent on last year’s figures, and the rest of Queensland delivering significant year-on-year gains.

“We have seen solid results in NSW across the state, with settlements up 26 per cent, and Victoria’s 10 per cent year-on-year growth was propped up by strong results in regional and commercial sectors.  

“From being the standout leader in volume for property sale settlements in FY20, we have witnessed the demonstrative impact the pandemic has had on the Victorian property market, with both NSW, and in particular Queensland, recording comparatively bumper year-on-year numbers across both metropolitan and regional areas.”

Mr Gill also noted consumer preference for the major banks, stating: “There also appeared to be greater consumer preference towards major banks for new loans in NSW and Victoria due to highly competitive rates, particularly for fixed-rate loans and special offers, such as cashback incentives.

“Queensland consumers bucked this trend, with the gap narrowing in favour of the non-major lenders within the state from January 2021.”

[Related: More than 200 housing markets hit $1m prices] 

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.