COVID-19 derails home ownership plans: CUA

Credit Union Australia’s Home Sentiment Survey has revealed that 32 per cent of all respondents believe that they are currently in a worse position with regards to buying property since the onset of the coronavirus pandemic.

One out of 10 respondents said they had considered buying an investment property or their own property before the COVID-19 crisis, but have since paused those plans, according to the research.

The survey of 1,500 consumers aged 18 and over, which was conducted by Pollfish, showed that out of those who believe they are in a worse position than before to buy or invest in a property, 40 per cent live in Victoria (which has faced extensive lockdown periods), while 44 per cent are aged between 18 and 24.

These findings correlate with new research from non-major bank ME Bank, which showed that 60 per cent of those surveyed believe COVID-19 has made it more difficult for them to enter the property market, while 23 per cent said they have delayed or downgraded their goal of buying their first property due to COVID-19.

On the other hand, a fifth of respondents in the CUA survey said they were in a better position to buy a house since the onset of the COVID-19 crisis, particularly those aged between 25 and 34, according to CUA chief customer officer Megan Keleher.

Out of those who believe they are in a better position to buy and invest in property, 33 per cent are first home buyers (FHBs).

She added that 46 per cent of all respondents said they were contemplating purchasing a property in the next 12 months.

More than half (53 per cent) of those considering purchasing property will be FHBs, while 32 per cent are existing mortgage-holders looking for a different home or additional property.

Almost a fifth of FHBs (17 per cent) indicated that government initiatives have enabled them to enter the property ladder before they thought they could, or helped them buy a bigger property than they thought would have been possible.

Commenting on this trend, Ms Keleher said: “The government initiatives in place are clearly helping many people overcome some of the roadblocks to achieving this dream, so it was very pleasing to see the recent extension of the First Home Loan Deposit Scheme to help an additional 10,000 first home buyers secure newly constructed homes.

“CUA is proud to have already helped hundreds of Australians into home ownership as part of this scheme, as well as continuing to assist eligible home buyers with their deposits through the BuyAssist shared equity program.”

However, one in 10 respondents was not aware of any government initiatives to help with home ownership, and fifth of people said they are not eligible for government initiatives.

What people want in a home

Respondents said what they regarded as important factors when purchasing new home has shifted as a result of COVID-19, echoing findings from other recently released research.

More than half (51 per cent) of all respondents and 63 per cent of those surveyed with children said they would like a separate office space, while 59 per cent and 70 per cent of those surveyed with children would like a garden and outdoor space.

Rooms that can accommodate work desks was an important factor for 53 per cent of respondents and 63 per cent of those surveyed with children, while fast internet service was considered vital for 68 per cent.

The lockdowns have led 64 per cent of respondents to nominate reduced cost of living as vital when considering where to live, while one in 10 is considering moving further away from the city and closer to nature to live a quieter lifestyle.

Typical location factors such as being close to public transport or living near the workplace have reduced in importance for 19 per cent and 23 per cent of respondents, respectively, indicating a shift in priorities since COVID-19 and the ability to work remotely.

Nearly a fifth (17 per cent) are monitoring the market, while 34 per cent believe now is a good time to purchase property before the market ramps up again, and 32 per cent find low interest rates appealing.

Refinancing becomes more popular

According to CUA data, there has been a 23 per cent jump in refinancing applications since May 2020, while Canstar figures showed that more than $53 billion worth of loans have been refinanced in the past six months in Australia.

The CUA research, which looked at the reasons behind the activity, revealed that a quarter of those refinancing intended to use the released equity to purchase a car or make another major purchase, while 18 per cent said the equity would fund home renovations or extensions.

“Refinancing can be one way to potentially save thousands of dollars over the term of your loan, and with interest rates at record lows, it may be a good time to consider refinancing,” Ms Keleher said.

“However, it is a big financial decision, and you need to consider more than just the interest rate. Fees and product features like redraw or offset facilities can make a big difference to the cost of your loan over time, so it’s important to do your research.”

[Related: Property remains the go-to option for investors]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.