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Housing sentiment rebounds, worries ease: ME Bank

by Malavika Santhebennur13 minute read
Housing sentiment rebounds, worries ease: ME Bank

There is renewed optimism about the property market, while fewer people are worried about paying back their home loan once their deferrals end compared with the past few months, according to a report.

The 7th edition of the ME Bank Quarterly Property Sentiment Report for the fourth quarter of 2020 revealed that only 29 per cent of respondents said they were worried about paying their home loan once banks ceased home loan deferrals and repayment holidays, down from 31 per cent in June.

The national survey of 1,000 adults in the property market (including investors, owner-occupiers and first home buyers [FHBs]) also found that sentiment among those in the property market has almost rebounded to pre-coronavirus pandemic levels, with significantly greater optimism for house prices and fewer worries among home owners.

According to the report, 38 per cent of respondents in the property market said they felt “positive” about the property market, just four percentage points below October 2019.


This is a significant increase from April following the impact of the COVID-19 crisis, which saw positive sentiment plummet to 29 per cent.

Respondents in NSW indicated feeling particularly buoyant about the property market, with positive sentiment rising from 29 per cent in June to 42 per cent in October.

In addition, respondents in the property market are showing greater optimism for house prices in October compared with the past quarter, with 65 per cent predicting that house prices will rise or stay the same where they live, compared with 46 per cent in April this year.

Only one in five (20 per cent) are expecting house prices to decline over the next 12 months, compared with 41 per cent in April.

ME Bank’s head of home loans, Andrew Bartolo, said that while there were initial signs of optimism in the last quarter, this has continued to grow into the second half of spring.

“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” he said.

Home owner worries ease

According to the report, fewer people are worried about the value of their property falling in general (49 per cent in October, compared with 64 per cent in April).

Additionally, 50 per cent of all respondents said they were worried about how COVID-19 would impact the value of their property, compared with 55 per cent in the third quarter.

Around half (49 per cent) said they are worried that it is going to become more difficult to refinance their home in the current economy, down from 54 per cent in the third quarter.

However, housing affordability remains a significant issue for respondents despite improving marginally, with 88 per cent of respondents agreeing that “it is a big issue”, compared with 90 per cent last quarter.

Two-speed market among buyers and sellers

As COVID-19-related restrictions ease, 55 per cent of property owners or buyers said they feel more confident about buying or selling property.

However, sentiment among those intending to buy or sell in the next 12 months revealed a two-speed economy, with 57 per cent indicating that they are not in a rush and are delaying their move until the COVID-19 situation improves, while 43 per cent indicated that they are looking to buy or sell property “as soon as possible”.

Furthermore, FHBs are the most likely group to purchase property (53 per cent), which is up 7 percentage points since October 2019.

However, 58 per cent of this cohort said that there “isn’t enough choice in the market”, while 58 per cent said that it is “harder to save for a home loan deposit during COVID-19”.

“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 said.

“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.”

Over two-thirds – or 69 per cent – of all property owners and buyers indicated in the report that “record-low interest rates have made buying or investing in property more attractive to them”.

Investor sentiment rebounds amid COVID-19

Positive sentiment among investors increased from 34 per cent in April to 43 per cent in October, and 8 percentage points below October 2019 levels of 51 per cent.

Furthermore, 54 per cent of investors surveyed said “more supply in the rental market together with falling rents hadn’t delayed their investment plans”.

However, 65 per cent of those in the property market believe landlords will need to reduce rents to attract tenants, increasing to 78 per cent among Sydneysiders and 73 per cent among Melburnians.

Commenting on the investor sentiment, Mr Bartolo said: “Despite the challenges of the current rental market, investor sentiment appears resilient and on the road to recovery.”

“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.”

Regional areas grow in popularity

The survey’s respondents believe that working-from-home arrangements amid the COVID-19 crisis will drive more people to buy property in regional areas, increasing from 68 per cent in June to 78 per cent in October.

More people also said they would consider buying in a regional area themselves, rising from 45 per cent last quarter to 50 per cent in October.

[Related: Loan repayments cheaper than rent: Aussie]

uptick mortgage graph

Malavika Santhebennur


Malavika Santhebennur is a content specialist at Momentum Media, focusing on mortgages and finance writing.

Before joining Momentum Media in 2019, Malavika held roles with Money Management and Benchmark Media, where she was writing about financial services.


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