Home buyers seem to have become more reluctant to buy a home during the second quarter of the year.

NAB’s latest study showed the weakest market sentiment among buyers since the third quarter of 2020, with only around 18% of prospective home buyers thinking it would be a good time to break into the housing market, down from 23% from the previous quarter.

The share of Australians who think it would be an ideal time to renovate also shrank, down from 32% to 24% during the quarter.

These results led to the decrease in the share of Australians who were planning to get a mortgage, which was only at 19% in Q2 from 27% in Q1.

NAB executive for homeownership Andy Kerr said these sentiments are showing that buyers are likely waiting just a little longer before taking the plunge.

“We’re predicting a drop in housing prices of around 18% in the next 18 months which would take us back to January 2021 levels,” he said.

“With a combination of house prices declining and the recent release of the First Home Guarantee Scheme, it will renew optimism for first-home buyers.”

Mr Kerr said “desk change” is becoming a thing among homebuyers, much like how sea- and tree-change trend shaped the housing demand in recent years.

“In the last 12 months, we are seeing more people buying in outer suburbs where it is more affordable and there is a train journey to the office for when they need to be there,” he said.

State-by-state sentiment breakdown

While there is an overall decline in homebuying sentiment across Australia, results vary across each state and territory.

Homebuying intentions

Around 27% of homebuyers in the ACT thought this would be a good time to break into the market, up from 25% in the previous quarter. The territory reported the highest share of optimistic homebuyers across the country.

In Tasmania, sentiments remained unchanged, with only 15% of homebuyers thinking it is time to join the market.

Declines, however, were seen in Western Australia (32% to 24%), Queensland (20% to 14%), Victoria (25% to 21%), New South Wales (21% to 18%), and South Australia (17% to 14%.)

Best time to renovate

Renovation sentiment continued to be elevated across states despite the overall quarterly decline.

Tasmania and South Australia reported the highest optimism level among renovators, with around 33% still thinking now would be a good time to kickstart their projects.

Other states and territories also posted elevated renovation intentions, from 22% to 26%.

Right time to apply for mortgage

There was less enthusiasm to apply for a mortgage across all states, with only around 14% to 24% thinking it would be a good time to go to their lenders.

Recent studies by CommBank and Westpac were consistent with NAB’s findings, showing that the recent rate increases and the unprecedented upswing in inflation seem to have already dampened Australians’ appetite for property.

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