The three-bedroom house at 19 Mulberry St, Armstrong Creek, is selling with price hopes from $575,000 to $625,000.
Relaxing home lending rules could increase the number of Geelong suburbs affordable to house hunters previously priced out of the market.
Exclusive analysis by real estate services group Oliver Hume reveals changing the test for a person’s borrowing capacity by lowering the mortgage serviceability rate by half a per cent would make six suburbs affordable for buying a house.
The number of suburbs reaches eight if the buffer was relaxed to a rate of 1 per cent, underlining the affordability challenge facing buyers in Geelong.
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If the serviceability buffer was lowered to 2.5 per cent, house hunters in Lara, Charlemont, Armstrong Creek, Mount Duneed and Waurn Ponds could borrow between $22,000 and $26,000 extra towards buying a house, the research found.
Prospective buyers could borrow about $31,000 more to buy a house in Wandana Heights.
The analysis showed prospective buyers could borrow between $5000 and $30,000 more to buy a house in suburbs across the region.
The suburbs are already among the most popular with first-time buyers, but Villawood Properties executive director Rory Costelloe said up to 25 per cent will end up asking for their deposit back when they can’t get finance.
Villawood Properties executive director Rory Costelloe said up to 25 per cent of first-home buyers walk away from buying a new block after being rejected for finance.
“We have buyers who look up a home loan calculator and work out they can make the repayments and put down a deposit subject to finance,” Mr Costelloe said.
He said many weren’t aware the Australian Prudential Regulation Authority (APRA) imposes the 3 per cent safety buffer on banks to add when considering whether someone applying for a home loan will be able to make their repayments.
The Coalition is promising to relax rules for approving home loans if it wins the federal election, claiming nearly 40 per cent of first-home buyers are not able to get a loan due to the restrictive buffer.
The buffer sits at 3 per cent above the lending rate after being raised during the Covid pandemic in 2021 when interest rates were at a record low of 0.1 per cent and were expected to rise.
Matt Bell from Oliver Hume said lowering the buffer was “good housing policy”.
Oliver Hume chief economist Matt Bell said he believed lowering the buffer was “good housing policy”.
“The real solution is the supply of more housing, but it’s hard to do and it takes time, so while this isn’t going to be a massive needle mover, that’s not a good reason not to do it,” Mr Bell said.
“We should be pulling every lever we can.”
Mr Bell said the current rate of 3 per cent was penalising low to middle income households.
“They’re literally saving to the point of when they’ve saved enough for a deposit, they go back to their lender and say; ‘we want to buy’,” he said.
The three-bedroom house at 19 Gilroy Crescent, Charlemont, is selling with price hopes from $545,000 to $595,000.
The three-bedroom house at 8 Carradale St, Waurn Ponds, is selling with price hopes from $705,000 to $740,000.
The Property Council is also calling for APRA to make the mortgage settings easier for home ownership.
“APRA should factor in first-time buyers when shaping regulations with an eye to boosting home ownership, maintaining balance and flexibility to adapt to changing conditions,” Property Council CEO Mike Zorbas said.
University of Sydney associate professor Stella Huangfu said lowering the buffer would only increase first-home buyers’ borrowing capacity temporarily.
“This additional borrowing power could drive up housing demand, which, in turn, would likely push house prices higher,” she said.
Oliver Hume’s research team used ABS Census data for average household incomes, indexed for recent wage growth and assumed a couple with no dependents purchased with a 20 per cent deposit, on a mortgage rate of 6.05 per cent.
Borrowing capacity has been calculated based on the median price of home in the 25th percentile of sales in the past 12 months, plus stamp duty.
with Elizabeth Tilley
GEELONG SUBURB AFFORDABILITY CALCULATOR
| Suburb | Median purchase price | Available funds at 3% buffer | Available funds at 2.5% buffer | Available funds at 2% buffer | Available funds at 1% buffer |
| Wandana Heights | $861,620 | $850,352* | $881,471* | $915,022* | $990,413* |
| Waurn Ponds | $742,370 | $722,803* | $749,163* | $777,582* | $841,442* |
| Mount Duneed | $660,088 | $702,488* | $728,631* | $756,816* | $820,150* |
| Armstrong Creek | $631,070 | $667,439 | $692,242* | $718,982* | $779,071* |
| Charlemont | $580,190 | $657,493 | $682,280* | $709,004* | $769,054* |
| Lara | $625,240 | $612,857 | $635,237* | $659,365* | $713,583* |
| Highton | $771,785 | $674,463 | $698,382 | $724,169 | $782,114* |
| Curlewis | $641,670 | $560,436 | $580,301 | $601,717 | $649,841* |
| Jan Juc | $1,276,550 | $853,357 | $881,056 | $910,918 | $978,023 |
| Torquay | $1,057,638 | $785,890 | $812,413 | $841,007 | $905,261 |
| Barwon Heads | $1,266,000 | $797,833 | $823,107 | $850,356 | $911,585 |
| Rippleside | $1,023,350 | $741,480 | $766,285 | $793,028 | $853,121 |
| Fairhaven | $1,578,544 | $814,791 | $838,149 | $863,332 | $919,919 |
| Ocean Grove | $880,170 | $608,229 | $628,220 | $649,772 | $698,203 |
| Anglesea | $1,279,188 | $674,621 | $694,199 | $715,307 | $762,738 |
| Geelong | $790,070 | $569,729 | $588,746 | $609,248 | $655,319 |
| East Geelong | $723,820 | $556,757 | $575,752 | $596,232 | $642,250 |
| Hamlyn Heights | $652,270 | $532,947 | $551,475 | $571,451 | $616,338 |
| Aireys Inlet | $1,363,588 | $667,059 | $685,570 | $705,527 | $750,371 |
| South Geelong | $748,995 | $550,809 | $569,320 | $589,277 | $634,121 |
| Leopold | $625,770 | $506,382 | $523,934 | $542,856 | $585,376 |
| Point Lonsdale | $1,055,000 | $573,400 | $590,318 | $608,557 | $649,543 |
| Lorne | $1,611,513 | $666,763 | $683,131 | $700,778 | $740,431 |
| Thomson | $505,195 | $261,827 | $278,051 | $295,541 | $334,845 |
| Belmont | $652,270 | $481,403 | $497,597 | $515,054 | $554,284 |
| North Geelong | $560,845 | $451,152 | $466,756 | $483,579 | $521,381 |
| Grovedale | $646,970 | $461,145 | $476,465 | $492,983 | $530,098 |
| Queenscliff | $1,213,250 | $566,215 | $581,448 | $597,871 | $634,775 |
| Bell Post Hill | $631,017 | $405,621 | $418,563 | $432,515 | $463,866 |
| Clifton Springs | $620,470 | $394,002 | $406,507 | $419,989 | $450,283 |
| Drysdale | $657,570 | $395,636 | $407,898 | $421,118 | $450,823 |
| St Albans Park | $564,290 | $368,471 | $380,299 | $393,051 | $421,707 |
| Bell Park | $560,580 | $353,730 | $364,923 | $376,989 | $404,104 |
| Indented Head | $723,820 | $373,459 | $384,149 | $395,675 | $421,575 |
| St Leonards | $661,545 | $353,034 | $363,332 | $374,434 | $399,381 |
| Marshall | $606,955 | $328,758 | $338,422 | $348,842 | $372,255 |
| Corio | $466,770 | $301,353 | $310,974 | $321,347 | $344,655 |
| Newcomb | $552,895 | $315,673 | $325,207 | $335,485 | $358,582 |
| Breakwater | $501,220 | $292,231 | $301,145 | $310,754 | $332,348 |
| Portarlington | $755,355 | $333,924 | $342,554 | $351,858 | $372,765 |
| Newtown | $911,970 | $344,683 | $352,462 | $360,848 | $379,692 |
| Whittington | $503,870 | $235,890 | $242,228 | $249,062 | $264,416 |
| Norlane | $423,575 | $196,667 | $201,915 | $207,572 | $220,284 |
Source: Oliver Hume. *Suburbs deemed affordable based on the suburb’s average annual income for a couple with no dependents. Borrowing capacity calculated based on the median price of home in the 25th percentile of sales in the past 12 months, plus stamp duty, and a 20 per cent deposit with a 6.05 per cent interest rate.
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