11-Jun-2019 • Home Buying

Despite recent house price falls, 88% of Australians in the property market think affordability is a significant issue.

That was the standout finding from ME’s new Quarterly Property Sentiment Report, completed at the end of April 2019.

Overall, property sentiment is mixed

While the Report shows a polarised market with 35% positive about the property market, 37% neutral and 28% negative, negativity was lower than might have been expected for a market that’s fallen dramatically in Australia’s key property markets over the last 12 months.

Sentiment is being driven by property status, age and property intentions with younger people more positive than older, investors were more positive than first home buyers and owner occupiers, and ‘those intending buy in the next 12 months’ were more positive than those intending to sell or do nothing.

ME’s GM Home Loans Andrew Bartolo said “positivity among investors and younger groups suggested some people were seeing price falls as an opportunity to buy”.

House price expectations remain positive

Expectations for prices over the next 12 months remain net positive, with 32% expecting prices will rise, compared to 28% expecting them to fall, and 29% expecting them to stay the same.

Price expectations varied based on respondents’ property status and location, with first home buyers the most likely to expect prices to rise, while people in metropolitan NSW, VIC, and WA are more likely to think prices will go down.

“Enduring positivity about price expectations is possibly linked to Australian’s long-held belief that property prices will always go up,” said Bartolo.

“Sentiment has also likely improved since we conducted the survey given negative gearing now seems to be off the table and APRA has proposed changes to home loan serviceability.”

Property intentions


The report finds 34% intend to buy in the next 12 months, while 12% intend to sell and 58% intend to do neither.

The most likely buyers are unsurprisingly those aged 25-39 years of age (52% of this cohort) and higher income earners (43% of those earning over $125,000 intend to buy).

Also, 44% of investors and 38% of first home buyers intend to buy in the next 12 months.

Effects on finances

Across household finances, changes in house prices have had the greatest negative impact on willingness to spend on discretionary items like entertainment or eating out, with 30% indicating a negative impact compared to 24% indicating a positive impact.

The most positive impact has been on household savings, with 36% indicating a positive impact and only 21% indicating a negative impact from house price movements.

“The negative impact on discretionary spending could flow through to the rest of the economy if it persisted. It will be interesting to see if household savings figures start to tick up as a result,” said Bartolo.

Housing affordability and credit tightening top list of worries


In terms of perceived worries and opportunities: concerns about housing affordability topped the list, with 88% of respondents agreeing that ‘despite price falls in some areas they still think housing affordability is a big issue in Australia’.

Bartolo said that “people often forget house prices doubled in recent years, so falls of 10%-15% won’t do much to improve affordability over the long-term.”

Tighter credit policies were also high on the list of worries, with 68% indicating concerns over the issue, followed by 62% expressing worry about the value of their property falling.

“Concerns about credit may change given the recent APRA announcement on serviceability.”

Concern over negative equity was high among investors (53% indicated they were worried). Similarly investors were the most concerned about being forced to switch from interest only to principle and interest home loan (74% of investors indicated they were worried).

On a more positive note, 59% said they were happy property prices are falling because it increases their chances of buying a property, jumping to 86% among first home buyers.

“Cooling property prices present new opportunities for those trying to get into the market,” said Bartolo.

“If you’re planning to buy it’s important to think long-term and always buy affordable.”

“Consider whether you can comfortably repay your mortgage over the long term regardless of changes to interest rates, your lifestyle, and without having to rely on less dependable sources of income like rent and bonuses.”


Editor notes:

ME’s Quarterly Property Sentiment Report is based on national survey of 1,000 Australian adults in the property market (i.e. investors, owner occupiers and first home buyers). The survey is designed, developed and produced quarterly by industry super fund-owned bank ME with fieldwork conducted by Pure Profile. This first survey was conducted at the end of April before the Federal election and APRA’s proposed serviceability changes.

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