Big bank index hits annual high as housing frenzy explodes

A shock surge in market confidence has sent a big-bank index to a major high – with experts warning homebuyers to act now or miss out completely.

National Australia Bank’s Residential Property Index, which tracks sentiment from agents, developers, investors and industry insiders, has soared to +44 – the highest level in the past year – with confidence now positive across every state and territory, including among first-home buyers.

With prices soaring and buyers set to battle it out from Brisbane to Perth, NAB’s home lending boss Denton Pugh reveals what this means for all Australians – and the three key steps buyers should take to stay ahead of the competition.

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NAB Executive for Home Lending Denton Pugh. Supplied.

By Denton Pugh, NAB Executive for Home Lending

Australia’s housing market is continuing to move as we head into the busy spring selling season. National house prices have now risen six months in a row. That puts values around 3 per cent higher since the start of the year.

Every capital is sharing in the upswing, with smaller cities like Darwin, Brisbane, and Adelaide emerging as standout performers boasting the strongest price growth of all. Regional areas are also pulling in plenty of buyers, offering better bang for your buck than our big cities.

This continued price growth comes despite still relatively high borrowing costs, supported by a noticeable lift in market sentiment. NAB’s Residential Property Index* released this week jumped to +44, its highest level in 12 months, driven by recent rate cuts and growing expectations of further easing. Confidence has turned positive across the country, including in the ACT, which had remained subdued for a while.

One of the hardest things to do is the most essential in the current market frenzy – stick to your limit.

With lower rates and market sentiment improving, more properties are expected to hit the market over the spring season. There will likely be more homes coming onto the market, but also plenty of eager buyers returning.

First home buyers are already stepping up, with the index showing their share of new housing rising to 40 per cent, the highest since December 2022.

This could be a prime opportunity to make a move. Here are a few things to think about so you’ll be ready to act fast when you find that dream property.

Know your strategy

A home to live in or rent-vest (buy where you can afford, rent where you want to live). This will guide many of your decisions, from the type of property you buy, the location, and how you structure your home loan.

Buying to live in may prioritise lifestyle factors, whereas an investment property means focusing on rental yield and growth potential. Be clear on your strategy so you can narrow your search and budget accordingly.

And consider all the extra costs, remember the price tag isn’t the only cost involved in buying a home.

Get finance pre-approved

Before you start making offers, talk to a banker about getting home loan pre-approval. This gives you a clear idea of how much you can borrow so you don’t waste time shopping outside your price range.

A pre-approval basically means the bank has agreed in principle to lend you a certain amount, pending final checks.

Timing is key here. Pre-approval typically lasts 90 days, so it’s smart to get it when you’re serious about buying.

If you’re buying your first home to live in, you might qualify for various federal and state-based assistance, such as the recently expanded Home Guarantee Scheme. New rules from 1 October mean all Australian first-home buyers can buy a home with a 5 per cent deposit and not pay Lenders Mortgage Insurance.

Make an offer and stick to your limit

Avoid getting swept up in FOMO. If you pay well above market value, the bank’s valuation of the property might come in lower than your purchase price, which means you might have to cover the gap in order to go through with the sale.

Keeping a cool head and not overextending yourself will ensure that when you do make that winning offer, you’ll sail through the last steps and soon collect the keys to your new home.

This spring should be busy. If you’re ready, speak with a banker. They can help you understand your budget, get pre-approval sorted, and make sure you’re prepared when the home you’ve been waiting for hits the market.

* NAB’s Residential Property Index a quarterly survey by NAB of property professionals (agents, developers, and investors) to gauge their views on the Australian housing market.

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