Confidence in property market soars to all-time high despite booming prices

author-avatar By on April 15, 2021
Confidence in property market soars to all-time high despite booming prices

Confidence in the residential property market has hit an all-time high, reflecting strong economic growth and expectations of further house price rises.

As the red hot housing market continues to bubble away, the latest ANZ-Property Council Survey shows sentiment in the property market has reached a new high.

"The combination of record low mortgage interest rates and targeted stimulus is clearly supporting the housing sector, where confidence is now at record levels," said ANZ Senior Economist Felicity Emmett. 

"Price expectations are at all-time highs, while the HomeBuilder scheme, along with state and federal government initiatives, has brought forward a large chunk of demand.

"This has more than offset the impact from low population growth and elevated unemployment."


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
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 23, 2021. View disclaimer.



Confidence in the residential property market has now surpassed the 2013 peak, while the outlook for house prices also hit a record high amid the booming market, which recently saw prices rise at their fastest rate in 32 years.

Expectations for price rises reached record highs across all states after national house prices rose 2.8% in March - the strongest gain since the late 1980's. 

"Our view is that housing prices will rise around 17% through 2021, helped by ultra-low mortgage rates, which have trumped factors like low population growth and elevated unemployment," Ms Emmett said.

Speaking at a Parliamentary hearing in Canberra today, Commonwealth Bank CEO Matt Comyn said the bank has upgraded its property price forecast.

“We were thinking 8%, and we are now thinking 10%,” Mr Comyn said.

ANZ had recently upgraded its price forecast to a 17% national increase in 2021 from 9% in a previous prediction.

Australians wary of further house price rises

General housing confidence might be high, but buyers waiting for house prices to come off the boil are becoming increasingly worried that they may continue surging, leaving them locked out of the market.

Yesterday's Westpac-Melbourne Institute of Consumer Sentiment found the 'time to buy a dwelling' index plunged 7.9% in April, and now sits 18.8% below its recent November peak.

"Buyers appear to be discouraged by the recent surge in prices and implications for affordability," Westpac Chief Economist Bill Evans said.

Westpac also identified a widening divergence between owner occupiers and investors.

"Owner occupiers are likely to be more sensitive to affordability rather than prospects for capital gains which usually drive investors."

But despite the signs pointing towards the property market soon reaching a tipping point, Westpac expects the Reserve Bank will maintain its current policy setting at its next meeting on May 4 and potentially until 2024.

The Reserve Bank has repeatedly said it expects to hold the cash rate steady until at least this time, and Westpac also doesn't believe the RBA will announce any immediate intentions to intervene in the housing market.

"Westpac expects that approach to change by the middle of 2022 as the authorities respond to further increases in prices and a likely lift in investor activity – in line with the signals emerging from this month’s survey," Mr Evans said. 

Despite no planned change in the cash rate, some lenders have already begun hiking variable home loan rates and some fixed rates as well

Adelaide Bank recently increased the variable rate by 15 basis points on its loans for owner occupiers paying principal and interest (P&I) with a loan-to-valuation ratio (LVR) of up to 90%.

The bank also increased the variable rate by 20 basis points for investors paying P&I with LVRs up to 90%; and increased the variable rate by 10 basis points for investors making interest-only repayments with LVRs up to 80%.


Photo by Jasper Bennett 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 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.

*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.

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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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