Aussies confident in property market after RBA rate cut

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on November 12, 2020
Aussies confident in property market after RBA rate cut

Photo by Ian Branch on Unsplash

Optimism in the property market has almost rebounded to pre-COVID levels after numerous cuts to interest rates and a bounce back in house prices.

Homeowners are less worried about the state of the property market while prospective buyers are feeling more confident about buying or selling, according to ME Bank's latest Quarterly Property Sentiment Report.

Based on a survey of 1,000 Australians, the report found that 38% of Australians were feeling 'positive' about the state of the nation's property market in the fourth quarter of 2020, compared with 29% earlier this year at the height of COVID.

“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” ME's Head of Home Loans Andrew Bartolo said.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 29, 2022. View disclaimer.

The report found that many homeowner-related worries have eased since earlier this year, with 49% worried about the value of their property falling (compared with 64% in April) and only 29% worried about paying back their home loan once deferrals end (compared with 31 in June).

Pandemic price crash unlikely

The report found that Australians are also more optimistic about house prices, with 65% predicting them to either increase or stay the same where they live, while only 20% are expecting them to fall over the next 12 months.

This is compared to 46% and 41% respectively in April this year.

The survey also revealed Australians are feeling more confident about buying or selling property now that COVID restrictions are easing.

Sentiment among those intending to buy or sell within the next 12 months indicates a 'two-speed market'.

Over half (57%) said they're ‘not in a rush and are delaying their move until the COVID-19 situation improves’, while 43% are looking to buy or sell 'as soon as possible'.

houseprices

Source: ME Bank

Melburnians are the most likely to buy in the next 12 months (44%) compared with other states.

Sydneysiders are also feeling particularly confident about the property market, with confidence up from 29% in June to 42% in October. 

First home buyers are the most likely group to buy a home (53%), however 58% say there 'isn't enough choice in the market' and 58% say it's 'harder to save for a home loan deposit during COVID'.

Despite the gradual withdrawal of government support and continued job losses, Mr Bartolo said recent cash rate cuts from the Reserve Bank should encourage buyers to make a move.

Screen Shot 2020-11-12 at 11.48.35 am

Source: ME Bank

“Despite growing positivity and optimism for house prices, there’s still many buyers and sellers who will be more comfortable continuing a ‘watch and see’ approach," he said. 

"The cash rate cut at the start of the month may encourage some to make moves in the market – particularly first home buyers looking to take advantage of the record low interest rates, price falls and reduced investor activity."

However, housing affordability remains a concern with 88% of Australians agreeing it's a 'big issue'.

Investors back in the market

Over two-thirds (69%) of property owners and buyers indicated that ‘record low interest rates have made buying or investing in property more attractive to them’.

The report found investors are feeling more positive about the property market, up from 34% in April to 43% in October.

More than half (54%) of investors surveyed said ‘more supply in the rental market together with falling rents hadn’t delayed their investment plans’.

However, when those in the property market were asked if they think landlords will need to reduce rents to attract tenants, 65% said yes. 

This increased to 78% among Sydneysiders and 73% among Melbournians.

See also: COVID pushes renter-landlord relations to the brink

“Despite the challenges of the current rental market, investor sentiment appears resilient and on the road to recovery," Mr Bartolo said.

"There are many factors at play, but with the residential property being a prudent investment vehicle and low interest rates, investors seem prepared to weather any property market fluctuations that may occur as the COVID-19 situation evolves."


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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