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.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
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'.
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.
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.
“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."
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
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.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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