Gold Coast housing market set to ‘soften’ as lending requirements tighten

It’s going to get tougher and tougher to borrow money from the bank for a home loan — but some city real estate leaders are saying the increases are going to make the housing market a “buyer’s dream”.

GOLD Coast house prices are tipped for “softening” as scrutiny of home loan applicants increases following the banking Royal Commission results yesterday.

That is the prediction by city real estate leaders who say already increased scrutiny of home lending applications will tighten further.

Ray White Surfers Paradise Group CEO Andrew Bell said it was a continuation of a process started “well over six months ago”, as banks had second-guessed recommendations to come.

“There’s been a significant change in the ability of buyers to get their finance,” he said.

“They’ve gone further than they needed to. The biggest impact is the complexity of the forms you actually have to fill out. It used to be three to four pages and it was almost taken at face value.

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Andrew Bell says the increase may turn buyers off the market, dropping house prices. Picture Glenn Hampson

“Now the applications can be 13 or 14 pages long, you have to provide incredible evidence about income, they will ask you quite invasive questions about your personal life to be really sure you can pay the loan.

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“It has resulted in a lot of buyers finding the whole process just too hard and deciding not to buy.”

As buyers turn away from the market there may be a drop in house prices, meaning a major impact on those looking to sell their homes, he added.

Unlike Sydney and Melbourne, which saw price increases of more than 90 per cent in under 10 years, the Gold Coast experienced much smaller, gradual increases.

The ‘vulture-like mentality’ of the market may make it better for buyers who can make the cut.

It’s this factor which has experts saying the area can “withstand” the impacts of the Commission’s recommendations.

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Tony Coughran, a buyers agent and property valuer at Gold Coast Property Buyers, said a decrease in prices and “shrinking” of the market may be a blessing for potential buyers to meet the tougher lending conditions.

“It will turn the market into a buyer’s market which is quite rejoiceful after sellers having so much power over the last few years,” he said.

“Where you could have borrowed a million dollars, you might only be able to borrow $700,000 now. If you’re pre-approved, you’re a powerful commodity as a buyer.

“I think (sellers) need to be aware they won’t be getting the offers they used to get when they’re selling a home, and be very respectful of the qualified buyers and offers being made.

“Cash is king, cash buyers are ruling the roost and there is a vulture-like mentality in some sectors of the market.”