Confidence in property market reaches historical high
4 May 2010
More Australians than ever before think prices will keep rising
A record number of Australians are preparing for property prices to increase in coming months, as demand for housing continues to outpace supply.
The latest Bankwest/Mortgage and Finance Association Home Finance (MFAA) Index shows three quarters of Australians (76%) believe prices will rise in the current quarter.
The data shows it’s the people upgrading or buying their second homes who are fuelling interest in the property market. Three quarters (74.8%) of next time buyers also believe it’s a good time to purchase investment property – up sharply from the record low 14.5% recorded during the height of the credit crisis. In contrast, prospective first time buyers are more cautious about the market, with only 43.7% believing now is a good time to buy compared to 49.7% in the last survey.
According to Vittoria Shortt Chief Executive, Bankwest Retail although interest rates are rising next time buyers are returning to the property market because of confidence in the economy and the jobs market.
“Historically, the market has proved a good barometer of home owners’ confidence in the economy,” said Ms Shortt. “During the early stages of the GFC house prices slipped, then the market recovered as first time buyers flooded the market. Now the baton has been passed to upgraders who see it as a good time to buy because of a strong economy and confidence in their job prospects.”
“We are also witnessing the return of investors to the market as a tight rental market see the potential for good rental yields,” added Ms Shortt.
“Savvy next time buyers are also aware of impending interest rate rises, and are factoring these into their decision making process,” said Ms Shortt.
The latest Index has also shown of the many people who are expecting the cash rate to keep climbing, almost half (47.1%) predict interest rates will rise by more than 0.5% within the next 12 months.
Riding the property wave
Interestingly, Australians in all states now feel house prices are headed higher. Of all States and Territories surveyed, Victorians were most likely to think the value of their property had risen (76.3%), comfortably exceeding the average across all states (61.8%).
The biggest improvement in perceived property value has been Western Australia, with only 3.3% of respondents feeling they have lost value compared to 16.7% in the last survey.
According to CEO, of the Mortgage and Finance Association of Australia (MFAA), Mr Phil Naylor;a climate of rising house prices and interest rates is a reminder to mortgage holders to shop around and take advantage of increased market competition.
“Our research shows understanding of mortgage broker services amongst both first time buyers and next time buyers is increasing,” said Mr Naylor. “Perceived benefits of using broker services include offering a wide loan range and having the expertise to help the customer select the home loan product of most value to their specific circumstances as well as undertaking all the necessary groundwork needed.”
Outlining the benefit of selecting one of MFAAs 12,500 members, Mr Naylor added; “Choosing an MFAA member confirms that broker meets the highest standards in the industry, meeting key consumer criteria of education, experience, ethics and professionalism.”
