Optimism has returned to the property market, according to ME’s latest Quarterly Property Sentiment Report.
They note positive sentiment has almost rebounded to pre-COVID-19 levels, “with significantly greater optimism for house prices and less worries among homeowners”.
The latest survey, conducted over the October quarter, found 38 per cent of Australians in the property market feel ‘positive’ about it – just four points below this time last year.
Positive sentiment dropped to 29 per cent in April, as a reaction to the pandemic.
Despite the vacancy rate in Sydney’s inner ring hitting an all-time high last month, ME’s Report showed positivity in the city has jumped to 42 per cent, after dropping to just 29 per cent in June.
“Overall, Australians in the property market are showing greater optimism for house prices, compared to the past quarter,” the report notes, with 65 per cent predicting house prices will increase or stay the same in their region, with only 20 per cent expecting a decline.
Only 49 per cent are worried their property may fall in value, with only 29 per cent worried about their ability to keep on top of their home loans once deferrals wind up.
“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” ME’s Head of Home Loans, Andrew Bartolo said.
Mr Bartolo also notes a “two-speed market emerging”, with sentiment among those intending to buy or sell in the next 12 months split between those “not in a rush and delaying their move” and those looking to buy or sell “as soon as possible”.
“Despite growing positivity and optimism for house prices, there’s still many buyers and sellers who will be more comfortable continuing a ‘watch and see’ approach,” Mr Bartolo explained.
“The cash rate cut at the start of the month may encourage some to make moves in the market – particularly first home buyers looking to take advantage of the record low interest rates, price falls, and reduced investor activity.”
Positive sentiment among investors increased from 34 per cent to 43 per cent, although 65 per cent of those in the market conceded that landlords will have to drop rents to attract tenants, with those figures reaching 78 per cent in Sydney and 73 per cent in Melbourne.
“Despite the challenges of the current rental market, investor sentiment appears resilient and on the road to recovery,” said Mr Bartolo.
“There are many factors at play, but with the residential property being a prudent investment vehicle and low interest rates, investors seem prepared to weather any property market fluctuations that may occur as the COVID-19 situation evolves.”