Despite the Reserve Bank’s decision to cut rates by 25 basis points in November, many potential home buyers are still choosing to remain on the sidelines, new research has found.
The Commonwealth Bank/Mortgage & Finance Association of Australia Home Finance Index for September found the ratio of respondents planning to buy property in the next 12 months had fallen to 16.9 per cent, down from 19.1 per cent in May and 21.6 per cent in January.
However, pessimism about property markets – due to fear about debt and the state of the economy – is matched by positive factors: a quarter of home owners are putting away more than 20 per cent of their take home earnings, up from 21.8 per cent in January 2011.
Mortgage stress is also down. In September 78.3 per cent of mortgagees said they were easily making repayments, up significantly from 68.3 per cent in May.
Those struggling to meet repayments have decreased from 25.7 per cent in May to 17.5 per cent in September.
MFAA chief executive Phil Naylor said the September Home Finance Index was a mixed bag, with consumers pulling back from buying property yet also putting themselves in a position to act when confidence returned.
"With a recent interest rate cut, high savings and low mortgage stress, prospective home buyers are in a relatively good position," Mr Naylor said.
"Reticence about buying property seems linked to the perceived state of the economy, not to the personal financial state of consumers."
Buyer reluctance is reflected in price expectations, with 46.4 per cent of the Home Finance Index respondents predicting lower house prices next quarter, more than double the 20.9 per cent recorded nine months ago.
New South Wales has the most optimism about house prices rising, while Victorians are the most pessimistic, with 51.7 per cent predicting a fall in house prices.