Sentiment among those in the property market has almost rebounded to pre-COVID-19 levels, with significantly greater optimism for house prices and less worries among homeowners, according to ME’s latest Quarterly Property Sentiment Report.
Australians in the property market are showing greater optimism for house prices, compared to the past quarter, according to new report.
The 7th edition of ME’s latest Quarterly Property Sentiment Report, conducted in October 2020, indicated 38 per cent of Australians in the property market said they felt ‘positive’ about the nation’s property market, just 4 percentage points below October 2019 (42 per cent).
This is following the devastating impact of the global COVID-19 pandemic, which saw positive sentiment drop to 29 per cent in April 2020.
Source: ME Quarterly Property Sentiment Report
ME’s Report showed a particularly large uptick in positivity among those residing in the New South Wales metro area which recorded a rise from only 29 per cent in June this year to 42 per cent in October.
Overal More are predicting house prices to increase or stay the same where they live (65%), and less are expecting them to decline (20%) over the next 12 months.
This is compared to 46 per cent and 41 per cent respectively in April this year.
ME’s Head of Home Loans, Andrew Bartolo said the initial signs of optimism we started to see last quarter had continued to grow into the second half of spring.
“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” he said.
Homeowner worries easing
In line with increasing positive sentiment, ME’s latest Quarterly Property Sentiment Report showed many homeowner-related worries have eased since earlier in the year, notably:
Additionally, sentiment towards housing affordability marginally improved, but remains a wide-reaching concern, with 88 per cent of Australians agreeing ‘it is a big issue’ compared to 90 per cent last quarter.
Source: ME Quarterly Property Sentiment Report
Clear ‘two-speed market’ emerging
Now that COVID-19 restrictions are easing, 55 per cent of property owners or buyers say they feel more confident about buying or selling property, according to the survey.
However, sentiment among those intending to buy or sell in the next 12 months shows signs of a ‘two-speed market’, with:
Source: ME Quarterly Property Sentiment Report
Those residing in Victorian metro areas are the most likely to buy in next 12 months (44 per cent) compared to other states.
Furthermore, first home buyers (53 per cent) are the most likely group to buy − up 7 percentage points since October 2019.
However, Mr Bartolo said 58 per cent of first home buyers indicated there ‘wasn't enough choice in the market’ while 58 per cent said it was ‘harder to save for a home loan deposit during COVID-19’.
“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."
Over two-thirds (69 per cent) of property owners and buyers indicated in ME’s latest Report that ‘record low interest rates have made buying or investing in property more attractive to them’.
Investor sentiment bouncing back from COVID-19
In a positive sign for the market, positive sentiment among investors increased from 34 per cent in April to 43 per cent in October 2020, inching towards the October 2019 level of 51 per cent.
Additionally, 54 per cent of investors surveyed said ‘more supply in the rental market together with falling rents hadn’t delayed their investment plans’.
Source: ME Quarterly Property Sentiment Report
However, when those in the property market was asked if they think landlords will need to drop rents to attract tenants, 65 per cent said ’yes‘.
This increased to 78 per cent among Sydneysiders and 73 per cent among Melbournians.
Mr Bartolo said investor sentiment appeared resilient and on the road to recovery, despite the challenges of the current rental market.
"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,” he said.
Source: ME Quarterly Property Sentiment Report
Regional moves continue to grow in popularity
Australians in the property market continue to believe that working from home arrangements will influence more people to buy in regional areas, increasing 10 percentage points to 78 per cent in October, from 68 per cent in June 2020.
More also say they would consider buying in a regional area themselves rising to 50 per cent from 45 per cent last quarter.
Click here to view the full report.
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