Invest
Indicators show property recovery is on the way
Consumer confidence is on the rise, with the property market tipped to benefit, an industry expert has revealed.
Indicators show property recovery is on the way
Consumer confidence is on the rise, with the property market tipped to benefit, an industry expert has revealed.
According to the latest Westpac – Melbourne Institute’s consumer confidence survey, consumer sentiment surged a further 11.9 per cent in October to be up 32 per cent in the space of two months, with the index hitting a 15^month high of 105.
The survey, which was conducted between 2-6 November was prior to pharmaceutical company Pfizer announcing it had a vaccine for COVID-19, which could be a boost to consumer confidence.
“It also preceded the recent encouraging developments around Pfizer’s coronavirus vaccine,” Westpac chief economist Bill Evans said.
“During the survey week, the Reserve Bank announced further interest rate cuts. While relatively modest, the cuts came with a commitment to keep rates on hold for at least three years. Subsequently, banks have further reduced the rates on fixed rate mortgages – some going below the psychologically uplifting rate of 2 per cent,” Mr Evans said.
A separate study by ME bank has also shown that property could be the big winner out of consumer confidence.
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 home owners.
ME’s head of home loans, Andrew Bartolo, said the initial signs of optimism we started to see last quarter have 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.
Clear ‘two-speed market’ emerging
Despite improving market conditions, those who are looking to get into the market might struggle, with a two-speed market emerging.
With COVID restrictions easing, 55 per cent of property owners feel confident about selling, 57 per cent are in no rush and are delaying their move until the COVID-19 situation improves.
Those residing in Victorian metro areas are the most likely to buy in the next 12 months compared with other states.
First home buyers are the most likely group to buy − up 7 percentage points since October 2019; however, 58 per cent of first home buyers say there ‘isn’t enough choice in the market’ and 58 per cent say it’s ‘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. 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,” said Mr Bartolo.
Over two-thirds 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 another leading indicator for the market, positive sentiment among investors increased from 34 per cent in April to 43 per cent in October, getting closer to October 2019 highs 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’.
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 Melburnians.
“Despite the challenges of the current rental market, investor sentiment appears resilient and on the road to recovery. 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,” Mr Bartolo concluded.
About the author
About the author
Property
Mortgage rates to rise as a result of NZ’s unexpected inflation jump
Three-year bond yields have jumped almost 20 basis points after NZ’s largest inflation rise in over a decade. ...Read more
Property
Rental vacancy rates rise in east-coast CBDs
Vacancy rates nationally remained stable during the month of September. ...Read more
Property
A first home buyer with cold feet? Here are your options
Even first home buyers can get cold feet about stepping onto the property ladder. ...Read more
Property
Demand for affordable housing set to rise
New lending rules introduced by APRA could increase the demand for units and townhouses. ...Read more
Property
Victoria launches $500m fund for home buyers
The Victorian state government has launched a new scheme that promises to make life easier for first-time home buyers. ...Read more
Property
Value of housing outstrips $9 trillion
Five, short months after hitting $8 trillion, the total value of residential real estate in Australia has surpassed a new record of $9.1 trillion. ...Read more
Property
Over 50,000 Australians sign up for government home buyer schemes
The federal government has provided an update on its Home Guarantee Scheme for first home buyers and single parents. ...Read more
Property
How first-time home buyers can play to their strengths
First home buyers face an uphill battle, but that’s not to say they can’t be smart about it. ...Read more
APRA’s mortgage crackdown, the power of DeFi and last-minute tax tips
Listen now
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
What does the NSW regional permit mean for property investors? Who really wins from the BHP-Woodside merger?
Listen now
Property
Mortgage rates to rise as a result of NZ’s unexpected inflation jump
Three-year bond yields have jumped almost 20 basis points after NZ’s largest inflation rise in over a decade. ...Read more
Property
Rental vacancy rates rise in east-coast CBDs
Vacancy rates nationally remained stable during the month of September. ...Read more
Property
A first home buyer with cold feet? Here are your options
Even first home buyers can get cold feet about stepping onto the property ladder. ...Read more
Property
Demand for affordable housing set to rise
New lending rules introduced by APRA could increase the demand for units and townhouses. ...Read more
Property
Victoria launches $500m fund for home buyers
The Victorian state government has launched a new scheme that promises to make life easier for first-time home buyers. ...Read more
Property
Value of housing outstrips $9 trillion
Five, short months after hitting $8 trillion, the total value of residential real estate in Australia has surpassed a new record of $9.1 trillion. ...Read more
Property
Over 50,000 Australians sign up for government home buyer schemes
The federal government has provided an update on its Home Guarantee Scheme for first home buyers and single parents. ...Read more
Property
How first-time home buyers can play to their strengths
First home buyers face an uphill battle, but that’s not to say they can’t be smart about it. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
