The latest quarterly property sentiment report from ME has revealed that optimism around the Australian property market has begun to return, following an initial downward trend as COVID-19 first took hold and caused a hit to the economy.

Positive sentiment rose to 35 per cent for Q3 2020, the report highlighted, up by 6 percentage points from the 29 per cent recorded in Q2.

However, 21 per cent of respondents did report they still feel “negative” about the property market overall.

Australians are also less worried about how COVID-19 will affect the value of property already owned, despite more than half of survey respondents (55 per cent) still considering it as a concern, down from 64 per cent in the last quarter.

Despite the return of optimism, 62 per cent of people who already own property do predict house prices to decline or stay the same over the next 12 months.

Just 26 per cent of property owners expect to see the value of their owner-occupied or investment dwelling increase, while 13 per cent are unsure.

ME general manager of home loans Andrew Bartolo said that the 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 had 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”.

With lockdowns across metropolitan Melbourne again a reality, Mr Bartolo expressed how, “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”.

First home buyers are the most optimistic about the current lending environment, but 57 per cent of investment property owners and 58 per cent of owner-occupied property owners did agree that record-low interest rates have made buying or investing in property more attractive.

nestegg recently reported that more than four in five first home buyers expect to see bargain properties begin to enter the market as the economy continues to suffer the fall-out of COVID-19.