More than two-fifths of all property buyers are confused about the home loan pre-approval process while over half said they missed out on a property as they did not have pre-approvals, according to a survey.
Aussie Home Loans (which recently merged with Lendi to be known as the Lendi Group) has released the Property Possibilities: Buyers’ Outlook Report May 2021, which has revealed that four in five (80 per cent) of property buyers believe that 2021 will be a good year for their property plans, compared to only 46 per cent in June 2020.
More than three-quarters (77 per cent) of property buyers said that they are confident about the property market and are still interested in buying property in 2021, but 54 per cent of respondents said that they feel unsure about how to take the first or next step to achieve their property goal, it said.
While 81 per cent of respondents said that they feel that there are opportunities for them in the property market, two-thirds said they have missed out on properties because the market is too competitive (68 per cent), while 66 per cent missed out because they were not ready (for example, because they did not have pre-approval or finances ready).
The majority of the survey respondents (82 per cent) said that they understand what a pre-approval is, but 17 per cent said that they do not understand the importance of pre-approval, while 52 per cent said that they do not know where to begin to obtain pre-approval.
Over half of all property buyers (54 per cent) said that they have missed out on property because they did not have pre-approval.
Younger cohort more confused by process
Younger generations feel more unsure about the next steps in their property journey, with 64 per cent of Gen Z and 56 per cent of Millennial property buyers saying they feel unsure, compared with 54 per cent of Gen X and only 19 per cent of Baby Boomers, the research found.
Overall, 45 per cent of all survey respondents said that they are confused about home loan language, while 40 per cent said that they are confused about how to secure the required home loan, and 41 per cent said that they are confused about the pre-approval process.
First home buyers (FHB) are the most likely to be confused about home loan language (57 per cent), while 54 per cent of FHBs are confused about how to secure the required finance/home loan, and 57 per cent are confused about the pre-approval process, the survey found.
The research – commissioned by Aussie Home Loans, with the survey of 2,019 respondents over 18 who are planning to buy property in the next 18 months conducted by Lonergan Research – found that younger home buyers are more likely to be confused about home loan language (56 per cent of Gen Z and 52 per cent of Millennials), compared with 38 per cent of Gen X and 19 per cent of Baby Boomers.
Only 17 per cent of Baby Boomers are confused about how to secure the required finance/home loan, compared with 51 per cent of Gen Z, 46 per cent of Millennials, and 33 per cent of Gen X, while 19 per cent of Baby Boomers are confused about the pre-approval process, compared with 47 per cent of Gen Z, 49 per cent of Millennials, and 34 per cent of Gen X, according to the survey.
Those buying an investment property are the most likely to feel optimistic about there being opportunities in the market for them (88 per cent), but FHB are the least likely to feel this way (74 per cent), the report said.
Respondents identify barrier to home ownership
Meanwhile, 91 per cent of respondents said that they “feel stuck”, which is holding them back from their property goals. While 53 per cent said market conditions were making them feel stuck, 35 per cent identified competition as a barrier while 31 per cent said they were unable to find the right property.
Two in five said that they feel stuck or held back due to lack of knowledge or feeling unsure about finances and processes while 36 per cent said financial difficulties are a barrier, the survey found.
Seven out of 10 respondents said that they intend to use a broker to assist them with their property goals, while eight in 10 said that they would like a tool or platform that could enhance their understanding of the property market.
Commenting on the research, Aussie chief executive, lending, David Smith said: The current Australian property market is strong, driven by a fast-recovering economy, record low interest rates, and a range of government incentives.
“At the same time, this is creating a highly competitive market for property buyers, with supply not meeting the growing demand in some suburbs, which in turn is continuing to drive property prices up.
“We also found that over half of property buyers don’t know what suburbs they can afford to buy in, while two in five are confused about the current house prices in their desired suburb.”
Mr Smith added that buyers may feel like it’s a seller’s market, with many feeling “stuck”, in their pursuit of their property goals.
“But progress is within reach if you do your homework and get organised in advance, so the next time your dream property comes along, you’ll be ready to make your move,” he said.
Find out more about the top property and home buying trends in your local area at the Better Business Summit 2021. Places are limited so make sure you secure your place at the five-state event asap!
[Related: BOQ joins Aussie panel]
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.