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Almost two out of every three Australians think now is the right time to get into the market, a new survey has found, while roughly the same proportion believes the housing market is about to crash.
The latest quarterly Housing Market Sentiment Survey by CoreLogic and TEG Rewards has found a significant paradox in housing market attitudes – with the majority of respondents indicating a willingness to buy a home at a time when the market may be vulnerable to a substantial correction.
Of the 2,432 Australian residents who participated in the June quarter survey, 64 per cent thought it was a good time to buy a dwelling, up from 60 per cent of respondents a year ago.
At the same time, 65 per cent also indicated they thought housing values could be exposed to a major downturn.
Respondents from Sydney, where affordability constraints are the most pressing of any capital city, were the most pessimistic – however, slightly more than half of them still believed it was a good time to buy.
Conversely, the regions where dwelling values have peaked and shown a downturn are where respondents are most confident about buying conditions. As many as 80 per cent of respondents in the Northern Territory, regional Western Australia and Perth indicated they thought it was a good time to buy.
CoreLogic research head Tim Lawless said the results were unexpected.
“With such a large proportion of survey respondents thinking that now is a good time to buy a dwelling, it was surprising to see almost two thirds also indicated they thought dwelling values could suffer a significant correction,” he added.
“While the results suggest that survey respondents are concerned there could be a substantial fall in Australian home values, the proportion is lower from a year ago, when 75 per cent of respondents thought the market was vulnerable to a significant correction in values,” Mr Lawless said.
On dwelling values over the next 12 months, most respondents expected values to remain steady, with those in Tasmania proving to be the most optimistic.
Nationally, however, optimism has cooled. Now only 38 per cent expect values to rise in the year ahead, against 45 per cent a year ago.
For rental market conditions, 11 per cent expect weekly rents to fall over the next 12 months, despite the CoreLogic rental series already showing the weakest rental conditions in at least two decades.
Nationally, almost equal numbers expect weekly rents to either rise or remain stable – however, across the regions there were considerable variations.
In Perth and regional Western Australia, less than one fifth thought weekly rents would rise.
“The low expectation of rental rises in these areas is in line with current rental statistics, which show ongoing falls in weekly rents across most parts of Western Australia,” Mr Lawless said.
The survey also explored attitudes toward foreign investment.
Nearly 95 per cent of respondents believed that foreign activity was placing some degree of upward pressure on home values, and 17 per cent of them believed the pressure to be extreme. However, more than half felt it was only modest or slight.
Sydney and Melbourne – where the Foreign Investment Review Board reports approvals for overseas buyers have been the highest – unsurprisingly also showed the highest proportion of respondents finding foreign buying placing extreme upward pressure on home values.
A full 25 per cent in Sydney, and 22 per cent in Melbourne, believed this to be the case.
Also, more than 70 per cent of respondents believed foreign buyers were making it more difficult for Australian residents to own their own homes – despite more than half of the survey finding only modest or slight upward pressure by overseas buyers on dwelling values.
The survey also explored the changes to negative gearing taxation rules, where opinion is broadly spread.
Almost a third indicated they were undecided about future federal government changes, 40 per cent felt Labor’s policy of removing negative gearing benefits for established properties should be implemented, while only 28 per cent believed the policy should be changed.
The survey also found most respondents expect a steady interest rate environment over the next six and 12 months, with a surprisingly large proportion (nearly 30 per cent) indicating they thought rates could rise.
When considering the most important consideration when making a property purchase, half of the survey indicated it was their personal financial situation. Next was capital growth potential, with interest rates third.
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