More than two thirds of Australians are concerned that Australia's housing market is vulnerable to a significant correction in values, a new survey has revealed.
According to the CoreLogic RP Data - TEG Rewards Housing Sentiment Survey, 68% of respondents indicated they believed Australia’s housing market is vulnerable to a significant correction in values.
However, the findings are a reduction from the previous quarter results where 75% of respondents indicated they were concerned about a significant downturn.
CoreLogic RP Data head of research Tim Lawless said it isn’t unlikely.
“While we don't envisage dwelling values will fall substantially, the probability of declines in Sydney, and to a lesser extent in Melbourne, after such a strong run of capital gains isn't unlikely.
“Home values are already trending lower in Darwin and Perth. It was less than three and a half years ago that capital city dwelling values fell by 7.4% between October 2010 and May 2012.”
Additionally, 95% of survey respondents believe that foreign demand is pushing dwelling values higher, with nearly one in five (19%) respondents indicating that foreign buyers were responsible for placing ‘extreme’ upwards pressure on home values. Only 5% of survey respondents thought foreign buying activity wasn't pushing home values higher.
According to Lawless, the results are a reminder that the true extent of foreign buying of residential properties across Australia continues to lack transparency, despite the House Economics Committee Report on Foreign Investment in Residential Real Estate being handed down almost a year ago.
“The latest statistics from the Foreign Investment Review Board haven't been updated since the 2013/14 financial year,” he said.
Just over half (55%) of survey respondents thought that the current housing market conditions represented a good time to buy a property, down from 60% in June. Respondents based in Sydney, where housing market conditions have been running the hottest, were the most pessimistic about buying conditions, however 29.7% of respondents still thought that now was a good time to be getting into the market.
Alternatively, more than 70% of survey respondents thought buying conditions were ripe in the Australian Capital Territory, Adelaide, regional Queensland and Perth.
The proportion of survey respondents who thought dwelling values will rise over the coming six months has been trending lower, with respondents who thought home values will rise over the next six months dropping from 49% in March and 48% in June to just 40% of all respondents in September.