Aussies drastically change their property price expectations

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New research highlights just how much Australian house price expectations have changed before and during COVID-19.

Switzer Financial Group’s first Switzer Fear, Greed & Hope survey, initiated in February 2020, showed that 65.9% of the 2,500 respondents surveyed thought property prices would increase overall in the coming 12 months, with just 4.7% expecting a fall. 

Now, the exact opposite seems to be the case. 

The second survey, conducted in May, found that 54% of respondents think prices will drop over the next 12 months, with less than 10% predicting an increase. 

Between 30-40% of respondents thought prices would remain roughly the same in both surveys. 

“In February 5% of Aussies thought house prices would fall and 66% expected prices to rise but in three months more than one in two think prices will fall. That’s an astounding turnaround," Switzer Financial Group Director Peter Switzer said. 

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Various recent studies by major banks show these fears over falling property prices might not be too hysterical:

• A worst-case scenario from Commbank shows a 32% fall, and an 11% fall in a better scenario 
• NAB's worst-case scenario shows a 30% price fall and 10% in better circumstances 
• ANZ said house prices would drop by just 10% nationally, but Sydney and Melbourne would be worse hit, dropping 13%. 

Source: Switzer Financial Group

The report sought to uncover investor attitudes towards markets and the economy over a three month period, and the coronavirus restrictions and worldwide shutdowns have seen some interesting changes. 

With so many Australians expecting prices to fall, property has also fallen out of favour compared to other investment options. 

According to the results, 10.5% would invest in property right now, compared to 62.7% in shares, 10.1% in term deposits and 16.4% in “other”, which could be things like bonds or fixed interest. 

“The big surprise here is that, after the coronavirus, more Australians feel comfortable investing in stocks over property,” Mr Switzer said. 

"As someone who has canvassed the view that the stock market sell off was over-the-top, the fact our market is now out of bear territory is satisfying.

"But I’m even more knocked out by the fact that investors haven’t been petrified by the Coronavirus, with our latest Switzer Fear, Greed & Hope survey showing that they’ve seen substantial buying opportunities."

The research also shows that the majority of respondents correctly predicted at least one of the Reserve Bank of Australia's (RBA) March rate cuts. 

Almost 70% (68.2%) said interest rates would be cut prior to the Reserve Bank’s record-breaking interest rate cuts.

Now, Australians are more torn, with 56.1% anticipating interest rates to move higher and 43.8% predicting another drop (the RBA has strongly hinted it won't be lowering the cash rate any further). 

Talking lockdowns, 64.3% of respondents felt Australia's restrictions were lifted at the right time, while 17.8% believe restrictions were lifted too early or too late (that's exactly 17.8% for both). 

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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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