First home buyers considering regional property during COVID-19: ME Bank

author-avatar By on July 16, 2020
First home buyers considering regional property during COVID-19: ME Bank

Photo by Josh Withers on Unsplash

First home buyers are eyeing off COVID-19 bargains in regional areas, a new report has revealed.

First home buyers are looking far and wide for a COVID-19 bargain, with some going as far as to look in country towns, ME Bank's latest Quarterly Property Sentiment Report has found.

The report, conducted for the June quarter 2020, found that two-thirds (60%) of young first home buyers were more likely to consider buying in regional areas because of the pandemic to save money and improve their lifestyle, compared with 45% of respondents overall.

ME General Manager Home Loans Andrew Bartolo said COVID-19 work from home arrangements have made Australians re-evaluate what they want in a property.

“New remote and flexible working arrangements brought in to accommodate for COVID-19 have clearly influenced Australians’ sentiment towards buying in regional areas," Mr Bartolo said.

"It’s now a more feasible option for many and if prices are lower in those areas and you think it will improve your lifestyle – of course it’s an attractive possibility.

“I think many Australians dream about moving to a regional area at some stage during their life, so it will be interesting to see how many do actually decide to pursue a sea or tree change, perhaps earlier than expected.”

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.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayment
 
Fixed 2 Years 70% LVR
2.19% 2.56% $1,517 Go to site
2.59% 2.55% $1,599 Go to site
Budget Home Loan OO P&I
2.68% 2.74% $1,618 Go to site

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. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 03 August 2020. View disclaimer.

A whopping 82% of first home buyers hoped to see more bargain properties pop up for sale if the economy worsens, compared with 66% of investors and 57% owner-occupiers.

The same report also found that just over half (51%) of first home buyers said they plan to get onto the property ladder within the next 12 months, while millennials were the most positive about the current property market than any other age group.

Mr Bartolo said the COVID-19 pandemic has created an opportunity for first home buyers.

“First home buyers may be looking to find a silver lining in the current economic climate, thanks to greater potential for property price falls, record low interest rates and government support," Mr Bartolo said.

"Of course, this will be more realistic for those whose employment and income haven’t been affected as a result of the pandemic.”

In terms of government support, the $25k HomeBuilder scheme appears to be sparking the most first home buyer interest.

Over half (52%) of first home buyers said they were interested in applying for HomeBuilder grants, compared with 33% of existing home buyers.

“With strong interest from first home buyers as seen in the report, hopefully the HomeBuilder grant will help more younger Australians get their foot in the door and increase buying activity in the wider market as a result,” Mr Bartolo said.

Overall, 58% of respondents said they thought the HomeBuilder scheme would significantly increase activity in the property market.

Australians feeling more optimistic about the property market

The report found that Australians are starting to feel more optimistic about the property market following the initial wave of COVID-19.

Positive sentiment rose to 35% for Q3 2020, up six points from 29% in the previous quarter. 

Concerns about how COVID-19 would impact property prices also eased off slightly, down 9% since last quarter to 55%.

But when asked about their property plans over the next 12 months, the majority of Australians (61%) are still planning to hold steady and neither buy nor sell.

Only 10% said they had plans to sell.

Mr Bartolo said it's unclear if this renewed optimism will last, especially given the second wave of cases in Victoria.

“The global pandemic continues to shift consumer sentiment and create volatility in the Australian property market, a situation no one would have expected at the beginning of the year," he said. 

"The impact of COVID-19 negatively shifted consumer sentiment towards the property market in the second quarter of the year, but we started to see signs of optimism in June.

“Hopefully this renewed positivity and growing confidence is able to weather possible second waves of COVID-19 cases as we’ve seen in Victoria, which is no doubt increasing worry across the nation.”

This survey was conducted for Q3 2020 in June when COVID-19 restrictions initially eased across most states and territories, before the second wave of cases in Victoria emerged.


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 2019. 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 2019) 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 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 joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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