Aussies confident in property market after RBA rate cut

author-avatar By 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
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME 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%
LIMITED TIME 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%
VariableMore details
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
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
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 19, 2021. 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 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): Great Southern Bank, 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.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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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author-avatar
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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