Buyer confidence and house price hopes surge in 2021

author-avatar By
on February 03, 2021
Buyer confidence and house price hopes surge in 2021

Confidence among Australians in the property market has reached a record high as house prices are tipped to surge in 2021.

ME Bank's latest Quarterly Property Sentiment Report shows positive sentiment among those in the property market is at record highs, while negative sentiment is at an all-time low, since the bank began its sentiment reports in 2019.

The report, which surveyed more than 1,000 Australian investors, owner-occupiers and first home buyers, found that confidence is being buoyed by expectations for rising property prices, increased levels of market activity, and a combination of record low interest rates and government incentives like HomeBuilder.

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

Lender

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
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
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster

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 August 14, 2022. View disclaimer.

ME Bank's Head of Home Loans and Personal Banking Claudio Mazzarella said the record high levels of positive sentiment among Australians is reflective of the resilience of the housing market, after some economists had predicted house price falls of up to 30% in 2020.

"While there are still many challenges such as unemployment and job insecurity, it's promising to see how sentiment and market activity have rebounded," he said.

"Government incentives such as HomeBuilder and record low interest rates have no doubt been large contributors to driving momentum across the market.

"We fully expect to see property investors back in full force this year. Sentiment within this group is bouncing back, with low interest rates make investing in property a more attractive option."

Positive sentiment among investors and owner-occupiers increased by 15 and 17 percentage points respectively. 

However, sentiment among first home buyers dropped 4 percentage points, despite 74% of FHBs saying that stimulus measures such as first home buyer incentives, stamp duty relief and HomeBuilder have made buying or investing more attractive to them.

High hopes for house prices

When COVID first began to impact Australians last year, fears of a housing crash began to build. Almost 12 months on, momentum in the property market is picking up speed fast, as speculation rises of a 2021 housing boom.

The report found 77% of those in the property market expect house prices to bounce back this year.

Similarly, fewer property owners are worried about COVID impacting the value of their property.

It comes after the last Domain house price report shows house prices hit a record high at the end of 2020 in all but two capital cities.

The national median house price surged by 5.8% in the three months to 31 December 2020, to $852,940.

When asked about property price expectations over the next 12 months, 54% of homeowners and buyers predicted prices will continue to go up.

Only 7% thought prices will fall.

"It's clear from our latest report that most Australians anticipate a strong uptick in residential property prices," Mr Mazzarella said.

"The data also shows a general increase in people's sense of wealth and financial confidence as a result of these price movements.

"The flip side to higher property prices is that it will make it harder for first home buyers to get their foot in the door. It will be important for new entrants in the property market to do their research."

Home loan lending data released yesterday reveals a 9.3% increase in first home buyer loans in December, the highest level since June 2009.

But despite the record increase in lending to first home buyers, an overwhelming 95% said housing affordability remains a big issue in Australia.


Photo by R ARCHITECTURE on Unsplash



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.

Latest Articles

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.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy