12-Nov-2020 • Home Buying

Sentiment among those in the property market has almost rebounded to pre-COVID-19 levels, with significantly greater optimism for house prices and less worries among homeowners, according to ME’s latest Quarterly Property Sentiment Report.

In the 7th edition, conducted in October 2020, 38% of Australians in the property market said they felt ‘positive’ about the nation’s property market, just 4 percentage points below October 2019 (42%). This is following the devastating impact of the global COVID-19 pandemic, which saw positive sentiment drop to 29% in April 2020.

ME’s Report showed a particularly large uptick in positivity among those residing in the New South Wales metro area. Only 29% of Sydneysiders said they felt positive about the market in June this year, rising to 42% in October.

Overall, Australians in the property market are showing greater optimism for house prices, compared to the past quarter. More are predicting house prices to increase or stay the same where they live (65%), and less are expecting them to decline (20%) over the next 12 months. This is compared to 46% and 41% respectively in April this year.

ME’s Head of Home Loans, Andrew Bartolo said the initial signs of optimism we started to see last quarter have continued to grow into the second half of Spring.

“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” he said.

Homeowner worries easing

In line with increasing positive sentiment, ME’s latest Quarterly Property Sentiment Report showed many homeowner-related worries have eased since earlier in the year, notably:

  • Less are worried about the value of their property falling in general (49% in October compared to 64% in April).
  • Less are worried about paying back their home loan once deferrals end (29% in October compared to 31% in June).

Additionally, sentiment towards housing affordability marginally improved, but remains a wide-reaching concern, with 88% of Australians agreeing ‘it is a big issue’ compared to 90% last quarter.

Clear ‘two-speed market’ emerging

Now that COVID-19 restrictions are easing, 55% of property owners or buyers say they feel more confident about buying or selling property. However, sentiment among those intending to buy or sell in the next 12 months shows signs of a ‘two-speed market’, with:

  • 57% indicating they’re ‘not in a rush and are delaying their move until the COVID-19 situation improves’, and
  • 43% indicating they’re looking to buy or sell property ‘as soon as possible’.

Those residing in Victorian metro areas are the most likely to buy in next 12 months (44%) compared to other states.

Furthermore, first home buyers (53%) are the most likely group to buy − up 7 percentage points since October 2019, however, 58% of first home buyers say there ‘isn’t enough choice in the market’ and 58% say it’s ‘harder to save for a home loan deposit during COVID-19’.

“Despite growing positivity and optimism for house prices, there’s still many buyers and sellers who will be more comfortable continuing a ‘watch and see’ approach. The cash rate cut at the start of the month may encourage some to make moves in the market – particularly first home buyers looking to take advantage of the record low interest rates, price falls and reduced investor activity,” said Mr Bartolo.

Over two-thirds (69%) of property owners and buyers indicated in ME’s latest Report that ‘record low interest rates have made buying or investing in property more attractive to them’.

Investor sentiment bouncing back from COVID-19

In a positive sign for the market, positive sentiment among investors increased from 34% in April to 43% in October 2020, inching towards the October 2019 level of 51%.

Additionally, 54% of investors surveyed said ‘more supply in the rental market together with falling rents hadn’t delayed their investment plans’.

However, when those in the property market was asked if they think landlords will need to drop rents to attract tenants, 65% said ’yes‘. This increased to 78% among Sydneysiders and 73% among Melbournians.

“Despite the challenges of the current rental market, investor sentiment appears resilient and on the road to recovery. There are many factors at play, but with the residential property being a prudent investment vehicle and low interest rates, investors seem prepared to weather any property market fluctuations that may occur as the COVID-19 situation evolves,” said Mr Bartolo.

Regional moves continue to grow in popularity

Australians in the property market continue to believe that working from home arrangements will influence more people to buy in regional areas, increasing 10 percentage points to 78% in October, from 68% in June 2020. More also say they would consider buying in a regional area themselves rising to 50% from 45% last quarter.



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 edition presents the findings from the seventh edition – Q4 of the 2020 calendar year, conducted in October 2020.


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