Property market holds up in early 2024 as home loan refinancing cools: PEXA

Australia’s property market has shown resilience in the first quarter of 2024 despite a slowdown in mortgage refinancing activity, according to the latest data from PEXA Group.

The Property and Mortgage Insights report, released today, paints a mixed but largely positive picture of the housing market’s performance in the three months to March.

PEXA Group Chief Economist Julie Toth said the market’s strength was underpinned by stable interest rates, solid employment conditions and easing inflation pressures, with the headline consumer price index falling to 3.6% in March from 7% a year earlier.

“Our latest data indicates a resilient property market that is gaining momentum despite the challenges of high inflation and interest rate pressures,” Ms Toth said.

“The moderation in refinancing activity was expected following the earlier peak that had been driven by fixed-rate loan expirations. Stable interest rates, solid employment and falling inflation are supporting demand for housing and suggest a positive outlook for the remainder of 2024.”

The five mainland states – NSW, Victoria, Queensland, Western Australia and South Australia – all recorded significant property sales activity in the March quarter, with Queensland leading the pack at 43,084 settlements.

NSW and Victoria were close behind, with the former posting the strongest annual growth in sales volumes at 10.9%.

Nationally, the total value of property transactions hit $150.6 billion for the quarter, a 17.2% increase on the same period in 2023. NSW topped the list with $54.5 billion in sales.

While the overall number of new home loans declined from the December quarter, Ms Toth said this was partly due to normal seasonal factors, with the year-on-year increase providing a better gauge of the market’s recovery.

Queensland saw the most new residential mortgages at 29,831, followed by Victoria and NSW.

The Sunshine State also experienced the biggest jump in median loan sizes, with values rising 13.5% in Greater Brisbane and 8.9% in regional areas over the past year.

Refinancing volumes moderated significantly in the March quarter, with 81,614 loans refinanced externally. This marked a return to mid-2021 levels after activity peaked in September 2023 due to a wave of fixed-rate loans expiring.

Ms Toth said the slowdown in refinancing was in line with expectations and historical trends, and pointed to a stabilisation in the cash rate at 4.35% since November as a potential catalyst for increased new lending in the coming months.

“From here, the stable cash rate at 4.35% since November 2023 is likely to support an increase in new mortgage issuances as the year progresses,” she said.

The latest figures provide a snapshot of a housing market that has so far weathered the headwinds of sharply higher interest rates and cost of living pressures, supported by a still-tight labour market and strong population growth.

However, with many economists tipping a further rate hike in June and signs of a slowdown in the wider economy emerging, the outlook for the property sector remains uncertain.