T
he Reserve Bank's three rate cuts have sent the Time to Buy a Dwelling Index soaring, with preapproval applications surging in a rush for home loans. The index jumped 37% nationally in the year to August, its biggest rise since before the Reserve Bank began raising rates in May 2022.
Buyers are flooding banks to secure preapprovals, hoping to get into the market before property prices surge again. The rate cuts have lifted borrowing capacity by around 7%, with someone earning a combined household income of $200,000 now able to qualify for over $1 million in loans - a threshold previously out of reach.
CommBank data reveals that the first two rate cuts sparked a 12% jump in conditional home loan preapprovals, with the average amount people are applying to borrow up by 13%. The bank's Executive GM Home Buying, Marcos Meneguzzi, said more people are feeling confident about their home buying options.
PRD Nationwide chief economist Dr Diaswati Mardiasmo expects rising demand to push markets to their highest levels since the pre-rate hike boom, particularly in Queensland, New South Wales, Western Australia, and Tasmania. She warns that affordability will be a major issue for many Australians, with higher debt levels and more demand pushing prices up.
The most eye-popping results came from Tasmania, where the Time to Buy a Dwelling Index skyrocketed 113.5% year-on-year. Dr Mardiasmo said this was a volatile market prone to a "push pull dynamic". Western Australia hit its highest level since November 2021, up 39.2%, while Sydney spiked 46.5% and Brisbane grew by 34.5%.
CommBank says preapproval takes just 10 minutes online, with customers feeling confident enough to do it. First homebuyer confidence is high among pre-approvals statistics, with the average amount they're applying to borrow now sitting at $546,000 - an 11% increase compared to last year.
Dr Mardiasmo said buyers will need to either widen their search or consider other types of stock, such as townhouses or units, due to affordability concerns. CommBank offers easy online preapproval applications that can be tracked in real time and are valid for 90 days with renewal options.
