Record-high positivity in property market

According to the ME Quarterly Property Sentiment Report, property sentiment increased 11 percentage points between January and December, hitting the highest peak since the report began (in 2019).

The report is based on the findings of a survey of 1,000 Australians, which was conducted by Pure Profile in January 2021.

It found that 49 per cent of respondents felt positive about the property market, up from 38 per cent in December 2020, and 4 percentage points higher than the previous high of 44 per cent (set in mid-2020). Similarly, negative sentiment was at a new low of 15 per cent.

The research found that sentiment was supported by expectations of residential property price increases, increased market activity and a combination of record-low interest rates and government incentives. 

Indeed, around 72 per cent of those looking to buy said stimulus measures such as HomeBuilder, first home buyer incentives and stamp duty relief in some states have made buying or investing in property more attractive to them – rising to 74 per cent among first home buyers. 

Positive sentiment was reported across all states and territories, with Queenslanders being the most positive in Australia at 56 per cent in metro areas and 58 per cent in the regions.

Among different buyer cohorts, investors and owner-occupiers reported to be considerably more positive than the last report (increasing by 15 and 17 percentage points, respectively).

First home buyers, however, recorded a fall in positive sentiment, down 4 percentage points to 27 per cent.

Market conditions making property more attractive

Despite the positive sentiment, the proportion of respondents looking to buy property in the next 12 months has held firm at 34 per cent for the third quarter in a row. Indeed, 95 per cent of first home buyers said that housing affordability was a “big issue in Australia”.

However, market conditions are making the proposition more attractive to both buyers and vendors.

The report found that 79 per cent of those looking to buy said record-low interest rates had made buying or investing in property more attractive to them. 

Additionally, ME’s latest research has shown that 77 per cent indicated they expect to see property prices bounce back this year – with 25 per cent expecting that the value of their property will rise in the next 12 months.

Only 7 per cent of those surveyed said they think the value of their property will decrease. Owner-occupiers reported the highest expectations for prices going up (57 per cent).

Following a year of restrictions and challenges for auctions and inspections, 78 per cent of respondents said they expect there will be more residential real estate activity this season to make up for last year. 

Respondents intending to buy or sell property in the next 12 months have indicated that they’re eager to do it as soon as possible (up 4 percentage points to 47 per cent), while less are not in a rush (down 4 percentage points to 53 per cent).

Speaking about the findings, ME’s head of home loans and personal banking, Claudio Mazzarella, said: “Government incentives such as HomeBuilder and record-low interest rates have no doubt been large contributors to driving momentum across the market. 

“We fully expect to see property investors back in full force this year. Sentiment within this group is bouncing back, with low interest rates making investing in property a more attractive option,” he added. 

Mr Mazzarella noted that most Australians anticipate a strong uptick in residential property prices, adding that the data also shows a general increase in people’s sense of wealth and financial confidence as a result of these price movements.  

“The flip side to higher property prices is that it will make it harder for first home buyers to get their foot in the door,” he continued.

“It will be important for new entrants in the property market to do their research,” Mr Mazzarella said. 

“A busy spring property season has overflowed into the start of this year and all signs point to raised levels of activity continuing for the coming months,” Mr Mazzarella said. 

“This will be especially beneficial on the supply side, offering prospective buyers more choice, ultimately helping the economy,” he concluded. 

[Related: Housing sentiment rebounds, worries ease: ME Bank]