New property market index delivers greater insight

Situation

In some key markets, it is a real challenge to obtain an accurate measure of success and growth trends. The residential home loan refinance market is a case where there is plenty of competition, but it is very difficult to discern which companies are doing better in key geographic areas and how to benchmark performance. The data that would provide these insights is restricted, mainly for compliance reasons.

PEXA, which manages Australia’s largest digital property exchange, now has a solution. The Residential Home Loan Refinance index allows lenders to compare their refinance portfolio movement with the national or state metro or regional markets.

The Refinance index provides insights into where relative market share is growing and where an existing portfolio may be at risk. Residential home loans are a crucial component of Australian banks’ profitability. Knowing where a lender is thriving and where there is a retention challenge is essential in managing the overall portfolio growth.

As a guide to the importance of this asset category, Residential property is the single largest investment asset class in Australia:

• $8.9 trillion residential property market
• $2.5 trillion stock total market cap
• $3.1 trillion Superannuation approx.

(All as of June 2021*)

So, clarity on housing market behavior is critical for homeowners, investors, government policymakers and financial institutions.

As Australia’s most prominent digital property settlement network, PEXA can provide deep insight into Australia’s housing sector transactions.

Knowing where a lender is thriving and where there is a retention challenge is essential in managing the overall portfolio growth.

Refinancing insights – residential property market

PEXA lifted transparency on the home loan refinance market by releasing the Refinancing Index to track home loan refinance activity over time.

• The index tracks both value and volume over the previous six months or twelve months.
• The Refinancing Index enables lenders to compare the level of refinancing activity in different states in Australia.

Solution development

PEXA engaged RoZetta Technology as a development partner to develop the Residential Refinancing Index. RoZetta has a highly credentialed Data Science team with experience in advanced modeling techniques with property and financial services expertise.

Benefits

PEXA delivers a total market lens on residential refinancing trends, an invaluable input for strategic planning and sales and marketing resources allocation.

The Residential Refinancing Index:

• Provides lenders with a means to set benchmarks for their portfolio management.
• It provides the most accurate, timely and comprehensive view of home loan refinance activity available, with history back to the base period of 15^th October 2018.
• The Residential Refinancing Index is a market first in terms of time-series trends and comprehensive geographic coverage.
• The index lays the foundation for a suite of strategic indices and metrics to build further transparency and competitiveness in this crucial market.

The index is on display on the PEXA website, contact us to more about our data science capabilities.

Sources

https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/residential-property-price-indexes-eight-capital-cities/latest-release

https://www.superannuation.asn.au/resources/superannuation-statistics

https://www2.asx.com.au/about/market-statistics/historical-market-statistics