Wealthier Australians are dominating home purchases: CoreLogic

Eliza Owen, CoreLogic’s head of residential research Australia, has revealed that the ‘surprising’ resilience of the property market in 2023 came as a result of a changing profile, with the demographic of buyers having changed.

Speaking on the Secrets of the Top 100 Agents podcast for our sister brand REB, Ms Owen noted that – despite the cash rate having risen rapidly to reach 4.35 per cent by the end of the year and borrowing capacity having decreased by approximately 30 per cent – home buying activity was still strong.

Indeed, house prices rose by 8.1 per cent over the year, driven by strong demand and a lack of supply, according to CoreLogic.

However, Ms Owen noted that the profile of borrowers in the market has been changing.

She explained: “As interest rates rose, borrowing capacity continued to be limited. A lot of estimates show that borrowing capacity has been reduced by around 30 per cent since the start of rate hikes. That means that the profile of the buyer in the market is wealthier, or they’re being supported by someone who’s wealthier, so think Bank of Mum and Dad. That was reflected in data as well. We saw a lot of the new loans that were coming out from the banking sector were on, basically, larger deposits. Even though the buyer profile tended to be wealthier and have more savings to support their purchases, they were operating in the more affordable end of town.”

Ms Owen also flagged that there was a growing trend of older Australians downsizing and gifting money to their children for property purchases, which added another dynamic to the evolving market landscape.

Moreover, CoreLogic’s head of residential research Australia noted that the household savings rate had plummeted to 1 per cent – the lowest since 2007 – which has meant that fewer people have been able to save enough money for a deposit.

Looking ahead to 2024, Ms Owen said that the predicted reduction in the cash rate could create more buyer demand, with more borrowers being able to service a mortgage.

As the property market strives to return to normalcy in 2024, factors such as supply levels, overseas migration, and interstate migration patterns become crucial. Net overseas migration figures are expected to normalise, bringing the property market closer to pre-COVID-19 conditions, allowing for more predictable planning and supply forecasting.

You can hear more from Eliza Owen and the profile of home buyers in the REB podcast, “Who buys property in a cost-of-living crisis?” below: