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While a recent survey has shown that people are becoming significantly more optimistic about the property market, it also revealed that the shift in perception does not seem to be causing heightened market activity.
ME’s second Quarterly Property Sentiment Report showed that just 17% of respondents expected house prices to fall in the next 12 months as compared to 28% in the first survey, conducted in April - before the federal election, APRA’s proposed serviceability changes, and two RBA cash rate cuts.
Worries eased across the board over the past three months, with concerns about tighter credit policies, negative equity, and being forced to switch to interest only repayments dropping between five and 10 points.
However, despite the improvements, the July report showed that people are less likely to buy or sell property than they had indicated in April.
“Reduced concern is likely connected to the increased sense of optimism about house prices, [but] house prices remain high by historical and international standards, hence perceived worries about affordability may take time to shift,” said ME’s group of executive customer banking, Craig Ralston.
The report revealed that housing affordability remains the top worry with 93% of respondents agreeing it’s a serious issue, up from 88% in April.
“There are more fence sitters who appear to be taking a ‘wait and see’ approach to the market – which is not surprising considering the recent economic and political changes,” Ralston added.
Further, he said intentional action and time will both be required to stimulate housing market activity.
“It will be a combination. A little bit of time is going to help, and some of the changes like APRA’s decision to change the serviceability buffer will create a small niche where there will be some good news for consumers,” he said.
“Also, as market commentary starts to shine a light on the fact that market sentiment has changed, you’re getting a balanced message out there for potential consumers and I think that, in turn, starts to create more confidence in terms of action as well,” Ralston said.
