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FHBs more likely to buy in the regions

regionallocation regionallocation
Annie Kane 8 minute read

Sixty per cent of first home buyers say they are more likely to consider buying property in a regional area after COVID-19, according to new research.

According to the sixth edition of ME Bank’s Quarterly Property Sentiment Report – conducted in June 2020 to ascertain sentiment towards property in Q3 2020 – first home buyers (FHBs) are more positive than any other segment about the market and more willing to look further afield for a bargain.

The research – which collated the responses of 555 owner-occupied property owners, 369 investor property owners and 225 first home buyers – found that FHBs were the most positive of all segments when it came to property.

Half of FHBS looking to buy in the next year


Overall, sentiment towards the property market rose, up 2 percentage points from the same period last year and up 6 percentage points from the previous quarter (from 29 per cent in April 2020 to 35 per cent in June 2020). However, this was still well below the high of 39 per cent in Q1 2020.

A growing number of FHBs said they felt positive about the property market – with nearly a third (32 per cent) stating so. This marks the highest figure recorded over the past six quarters (tied with Q1 2020) and is in contrast to the reducing proportion of investors who feel positive about the market.

In fact, FHBs were also the most likely segment to purchase a property in the next year, with more than half (51 per cent) stating they intended to do so in the next 12 months (the highest figure recorded since Q1 2020). A similar proportion also said they were interested in applying for the HomeBuilder grant (compared with 33 per cent of existing home buyers).

In terms of motivating factors, three-quarters of FHBs agreed that record-low interest rates had made buying or investing in property more attractive to them (the highest proportion of any segment) and half said they were spending “a lot more time thinking about and looking at properties for sale because of COVID-19”. This segment was also found to be the most optimistic about securing a bargain property deal should the economy worsen (82 per cent).

Across the board, property buyers and vendors believed that COVID-19 would also influence more people to buy homes in regional areas, with 60 per cent of FHBs saying they were more likely to do so to “save money and improve [their] lifestyle”, compared with 45 per cent of total respondents overall.


‘FHBs looking to find a silver lining’

Commenting on the findings, ME general manager, home loans, Andrew Bartolo said: “First home buyers may be looking to find a silver lining in the current economic climate, thanks to greater potential for property price falls, record-low interest rates and government support. Of course, this will be more realistic for those whose employment and income haven’t been affected as a result of the pandemic.

“With strong interest from first home buyers as seen in the report, hopefully the HomeBuilder grant will help more younger Australians get their foot in the door and increase buying activity in the wider market as a result.”

He continued: “New remote and flexible working arrangements brought in to accommodate for COVID-19 have clearly influenced Australians’ sentiment towards buying in regional areas. It’s now a more feasible option for many, and if prices are lower in those areas and you think it will improve your lifestyle – of course it’s an attractive possibility.

“I think many Australians dream about moving to a regional area at some stage during their life, so it will be interesting to see how many do actually decide to pursue a sea or tree change, perhaps earlier than expected,” he said.

The head of home loans told The Adviser that brokers were particularly well placed to help support these borrowers. Mr Bartolo said: “Brokers are incredibly important to ME, with over 70 per cent of our home loan customers choosing us through brokers.

“Many borrowers rely on brokers to help them navigate the application process. In these challenging times, some borrowers might prefer direct, personal contact with a broker rather than a bank.”

Noting that the survey was undertaken in June 2020 (before the recent uptick in new COVID-19 cases), Mr Bartolo added: “The global pandemic continues to shift consumer sentiment and create volatility in the Australian property market, a situation no one would have expected at the beginning of the year. The impact of COVID-19 negatively shifted consumer sentiment towards the property market in the second quarter of the year, but we started to see signs of optimism in June.

“Hopefully, this renewed positivity and growing confidence is able to weather possible second waves of COVID-19 cases as we’ve seen in Victoria, which is no doubt increasing worry across the nation.”

The findings echo those made by ING recently in its Future Focus: Homeownership Report, which found that a third of Millennials expect to buy a property in the next two years, with many having used the lockdown to accelerate their home ownership journey, according to ING research.

Moreover, major brokerage brand Aussie reported earlier this week that home loan enquires from FHBs surged over the month of June, up 219 per cent from the previous corresponding period.

According to Aussie CEO James Symond, a combination of falling home prices, lower mortgage rates and stimulus from the federal government has helped keep FHB demand afloat amid the general slump in confidence off the back of the COVID-19 crisis.

“With property price growth dropping off, along with the lowest interest rates on record, and a range of government schemes on offer, if you are in good shape from an employment and income perspective, now could be a good time to get into the market,” he said.

[Related: FHB demand soars, bucks credit trend]

FHBs more likely to buy in the regions
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.



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