Despite an uncertain economy, home buying confidence across the country is strong. In fact, this is the highest it’s been in 12 months.
Between falling interest rates and rising optimism for 2021, Australia is starting to see a serious return of buyers. We’ll look at why this is happening across the board, even in places with recent lockdowns, like Melbourne.
The Westpac-Melbourne Institute Index of Consumer Sentiment measures a number of opinions, including whether it’s the right time to buy a home. The most recent report showed a 10.6% rise for this question, marking the best showing since September 2019.
The confidence we’re seeing is largely spurred by federal budget changes. Low mortgage rates triggered a 31.5% rise in the home price expectations index. This is happening across all states, including Western and South Australia (areas that usually fall behind the Eastern Australia powerhouse).
Not only are auction clearing rates improving, but we’re also seeing a rise in loan pre-approvals, particularly the case for first-time buyers. This is astounding as the unemployment rates are at an all time high. But Paul Bloxham, chief economist at HSBC, has commented that the downturn is likely to die off as we enter the new year.
Australia saw its biggest fall in confidence in early 2020 due to the pandemic. The property market hadn’t experienced such a drastic swing in more than four decades. Economists are astonished by the latest recovery, and attribute its success to the steady rate cuts resulting from COVID-19. The rate cuts started on the 5th of February and have carried through to the 3rd of November.
If you’re looking to purchase property in Sydney, now is a good time. No matter how the property market reacts to COVID-19 in the long term, there will always be interest in Sydney property. Being in the heart of such a cosmopolitan city is an exciting prospect for anyone, but it’s especially attractive to investors.
What’s slightly surprising is the strength of Western Australia, rising by 29% in consumer confidence, and South Australia, rising 10% in confidence.
Bill Evans, chief economist at Westpac, is encouraged by the optimism, especially when these states have a reputation of underperforming in the markets. Even Victoria has seen its price expectations rise by double digits.
There are going to be certain sectors in the economy that take longer to recover, but strategic investors have seen a window open for them. This could be the perfect time to buy property for a variety of reasons:
In the short-term future, we might see a lower supply of property because people aren’t confident enough to place their homes for sale. However, we’re also likely to see property prices peak sometime in the latter half of 2021.
As noted above, sales have been scarce as of late. As good as the more recent news has been, not everyone is expecting a bulletproof economy. Shane Oliver, chief economist at AMP capital has predicted a fall of property prices across the nation of 5% for next year. He attributes his forecast to high unemployment, a poorly performing rental market, and a lack of immigration.
Price indexes for Sydney show that there’s already been a housing price fall of 3.8% from their early-year peak, according to SQM Research. Units have fallen by 6.8%, the biggest loss being in the central business district.
However, there’s more to the story than this. We’re also starting to see a rise of listings in Melbourne and Sydney property. Auction clearance rates were 80.4% with 712 properties going over the third week in October. This kind of action reflects the positive vibes that we’ve been seeing in consumer confidence.
Shore Financial knows there are some serious advantages to buying property right now. Whether you’re selling to buy, purchasing for the first time, or looking for a second (or third) residential property, we think now is a good time to make a move.
If you’re ready to jump in while market confidence is on its way up, Shore Financial is here to give you strategic advice.
As property experts, we can tell you more about what the best options are for you. Get in touch with our team today.