More optimism on house-buying than last year
The latest quarterly housing market sentiment survey by CoreLogic and TEG Rewards reveals that almost two thirds of Australians think now is a good time to be buying residential property, while roughly the same proportion believe the housing market is vulnerable to a significant correction.
According to CoreLogic research head Tim Lawless, the latest CoreLogic and TEG Rewards Housing Market Sentiment Survey highlights the paradox in housing market attitudes, with the large majority of survey respondents indicating that it’s a good time to buy a home at a time when the market may be vulnerable to a significant downturn.
Of the 2432 Australian residents who participated in the June quarter survey, 64 per cent thought it was a good time to buy a dwelling, up from 60 per cent a year ago.
In Sydney, where affordability constraints are the most pressing of any capital city, respondents were the most pessimistic about whether now is a good time to buy, though slightly more than half still felt it was.
The regions, on the other hand, where dwelling values have peaked and shown a downturn, are where respondents are most confident about buying conditions. Eighty per cent or more of respondents in the Northern Territory, regional Western Australia and Perth indicated they thought it was a good time to buy.
“With such as a large proportion of respondents thinking that now’s a good time to buy a dwelling, it was surprising to see almost two thirds (65 per cent) also indicated they thought dwelling values could suffer a significant correction,” Lawless says.
“While the results suggest that survey respondents are concerned there could be a substantial fall in Australian home values, the proportion is lower from a year ago, when 75 per cent of respondents thought the market was vulnerable to a significant correction.”
On the subject of whether dwelling values would rise, fall or remain steady over the next 12 months, the majority of those asked expected values to remain steady, with Tasmanians the most optimistic about the direction of value growth.
Nationally, 38 per cent are expecting dwelling values to rise over the next year. In contrast, a year ago 45 per cent of respondents thought values would rise, indicating that people have become less optimistic with regards to capital gains.
Interestingly, just 11 per cent of respondents are expecting weekly rents to fall over the next 12 months, despite the CoreLogic rental series showing the weakest rental conditions in at least two decades.
Nationally, almost equal numbers of survey respondents indicated that weekly rents would either rise or remain stable over the coming year, though there were considerable variations across the regions.
Less than one fifth of respondents in Perth and regional WA think weekly rents will rise.
This low expectation is in line with current rental statistics showing ongoing falls in weekly rents across most parts of WA, according to Lawless.
Another thing the survey explores is attitudes toward foreign investment.
Ninety-four per cent of survey respondents believe that foreign buying activity is placing some degree of upwards pressure on Australian home values, while 17 per cent believe foreign buying is placing “extreme” upwards pressure on home values.
When it comes to negative gearing, almost one third of respondents indicated that they weren’t sure if the federal government should make any changes, 40 per cent indicated that they didn’t think the Labor policy of removing negative gearing benefits for established properties should be implemented, and a much lower 28 per cent thought the policy should be changed.
The survey also indicated that most respondents are expecting a steady mortgage rate environment over the next six and 12 months, with 29 per cent indicating they think rates could rise over the next year.
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