An eventful start to the year in property has affected consumer sentiment across a range of issues including house prices, interest rates and securing finance, new data shows.
In March, we asked visitors to realestate.com.au for their thoughts on the property market, including current conditions and expectations for market activity throughout the rest of 2019.
Of the respondents, 44% predicted property prices would fall, while 24% felt they would stay the same and 15% expected a rise. These results were consistent with perceptions in December 2018, when the survey was last conducted.
Yet only one in five realestate.com.au visitors now expect the RBA to cut rates in 2019 (21%) – a significant contrast to the one in 10 who expected a rate drop when asked in December. The majority of respondents expected rates to stay on hold for the rest of the year (41%).
However, 41% of readers in March believed major lenders would raise their rates in 2019, with only 8% expecting a cut.
Respondents to the survey, conducted between 23 March and 1 April, were mostly ‘transactors’ (73%), with the majority being buyers (52%). Breaking it down further, 32% were first home buyers and 68% were subsequent purchasers.
Impact of current conditions
In March, more than one in two respondents said they’d been directly affected by changing market conditions.
Despite a challenging landscape, 33% said their property movements were actually fuelled by falling prices – 13% were looking to suburbs they felt were previously out of reach; 12% said they were encouraged to buy earlier than expected; 11% were motivated to save harder for a deposit; and 10% felt home ownership was now an attainable goal.
At the other end of the spectrum, 25% of respondents were disheartened by the market conditions, with 17% discouraged from selling and 11% now hesitant to buy.
Compared to December data, more buyers were encouraged to take action in the current market.
While falling prices are presenting challenges to sellers and investors, many buyers are seeing it as a window of opportunity to purchase or take the next step in their property journey, says realestate.com.au’s Chief Economist, Nerida Conisbee,
“Consumer sentiment is definitely down compared to 18 months ago; we can’t deny that people are looking at property very differently and we know that the Reserve Bank identified consumer sentiment as an issue. People don’t like to spend when their house values are going down,” Conisbee says.
“First home buyers are very happy, partly driven by the fact the market has calmed down, but they do take longer in their decision-making and tend to react better to a slower market,” Consibee says.
“Places like Melbourne and Sydney have renewed first home buyers grants, and first home buyers are seen as a pretty safe bet for banks – although they may be finding it harder to get money, but not as hard as investors.
“Investors, local and offshore, are finding it tough. Particularly in a market like Sydney where the rental vacancy is increasing.
“Upgraders aren’t necessarily at a disadvantage; even though they’re selling in a market that’ll give them less money, they’re also buying at a lower price so it’s potentially a neutral position.
“Downsizers are the same, (but) they may be disadvantaged if they were hoping to get a greater chunk of money.”
Buy, sell or stay?
So far for 2019, buyers appear to be more optimistic about purchasing in the current market – however, they anticipate difficulty around borrowing conditions and broader economic factors.
The March survey found 62% believed it would be hard to obtain a home loan this year, with 64% saying they’d lost trust in the Big Four banks.
One in 10 said they had been discouraged from applying for a home loan in the immediate future.
Furthermore, 31% of respondents were nervous about the impact of potential changes to negative gearing laws (51% of this segment were investors).
While 30% of home owners were concerned the value of homes in their area would decline in 2019.
On the brighter side, 55% said lower property prices were the biggest benefit to buyers in 2019, and 30% believed it would be easier for first home buyers to enter the market this year.
Looking ahead, 20% believe 2020 will be a better year to sell a property.