One in three Australians plans to purchase a home in the next 12 months amid the expectations of a price boost, according to ME Bank's Quarterly Property Sentiment Report.
Of those Australians who said they would participate in the market, more than half (52%) were in the age 25-39 age bracket, the majority of whom are millennials. The study also found that 43% of those who were planning to buy are high-income earners who take home over $125,000 annually. Furthermore, roughly 38% of these would-be buyers were first-timers, while 44% were investors.
Concerns of homebuyers
Despite the price declines currently being experienced in the housing market, housing affordability remained the top concern for almost nine in 10 homebuyers, said Andrew Bartolo, ME’s general manager for home lending.
"People often forget house prices doubled in recent years, so falls of 10% to 15% won't do much to improve affordability over the long term," he said.
Around two in three homebuyers also cited tighter credit policies as one of their housing-market worries. However, Bartolo said the proposal of APRA to ease lending rules might appease these worries in the months to come.
There were also those who said falling dwelling values were an issue, especially if the housing downtrend puts them into negative equity — a significant fear for more than half of the investors surveyed.
On the other hand, 59% of prospective buyers and 86% of first-home buyers were actually happy that prices are falling, since the downturn would increase their chances of purchasing a home.
"Cooling property prices present new opportunities for those trying to get into the market. If you're planning to buy it's important to think long-term and always buy affordable," Bartolo said, "Consider whether you can comfortably repay your mortgage over the long term regardless of changes to interest rates, your lifestyle, and without having to rely on less dependable sources of income like rent and bonuses."
House-price growth expectations
The report also shows the attitudes of Australians toward the future of house prices — 32% of those surveyed believed prices would shoot upwards in the next twelve months, while 28% expected them to continue to fall. There were also 29% who assumed that prices would stay the same.
Price expectations varied based on respondents' property status and location, Bartolo said. In fact, first-home buyers expected prices to rise while Aussies living in metropolitan New South Wales, Victoria, and Western Australia believed prices will go down.
"Enduring positivity about price expectations is possibly linked to Australian's long-held belief that property prices will always go up," he said.
Overall, the study showed a polarised market sentiment with 35% of homebuyers having positive attitudes towards the market, 37% having a neutral stance, and 28% having negative sentiments.