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Almost two out of every three Australian’s 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 large majority of respondents indicating a willingness to buy a home at a time when the market may be vulnerable to a substantial correction.
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Of the 2,432 Australian residents who participated in the June quarter CoreLogic TEG Rewards Housing Market Sentiment Survey, 64% thought it was a good time to buy a dwelling, up from 60% of respondents a year ago.
At the same time 65% also indicated they thought housing values could be exposed to a major downturn.
Sydney-based respondents, 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%, and more, 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 are 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% 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% expect values to rise in the year ahead, against 45% a year ago.
For rental market conditions, 11% 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 think weekly rents will 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% of respondents believe that foreign activity is placing some degree of upwards pressure on home values, and 17% 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 has been the highest – unsurprisingly also showed the highest proportion of respondents finding foreign buying placing extreme upwards pressure on home values.
A full 25% in Sydney, and 22% in Melbourne, believed this to be the case.
Also, more than 70% of respondents believe foreign buyers are making it more difficult for Australian residents to own their own homes — despite more than half of the survey finding only modest or slight upwards 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% felt Labor’s policy of removing negative gearing benefits for established properties should be implemented, while only 28% believed the policy should be changed.
The survey also found most respondents expect a steady interest rate environment over the next 6-12 months, with a surprisingly large proportion (nearly 30%) indicating they thought rates could rise.
When taking into account the most important consideration when making a property purchase, half of the survey indicated it was their personal financial situation. Next is capital growth potential and interest rates is third.
[Related: Majority of investors ‘losing’ money]
