Despite continuing concerns surrounding record low housing affordability, rising interest rates and a housing bubble, Australia’s property markets have managed to retain favour with purchasers.
According to the latest report from independent market analyst Datamonitor, Australians still have strong purchasing intentions, with 8% aiming to buy an investment property in the next 12 months and 7% planning to escape the rental rat race and purchase their own home.
The report reveals that potential first home buyer numbers have increased from 6% in 2009, which is somewhat surprising given that most forecasters were predicting a drop in first home buyer demand for 2010.
Datamonitor’s financial services analyst Peter Ingemarsson said, “The strong first-time buyer demand in the survey is largely driven by confidence in property prices. The residential property market weathered the storm of the financial crisis without a major price correction, contributing to the current strong consumer confidence.”
He said that after the “tremulous last year”, consumer confidence in our property market has rebounded, with prospective property investor numbers also increasing. Eight per cent said they were considering buying an investment property in the next 12 months, compared to just 5% in 2009.
Interestingly, this strong consumer sentiment coincides with the fact that 20% of those surveyed thought a drop in property prices was very or quite likely this year, compared to 58% in 2009.
Ingemarsson says property investor intentions are driven by the prospect of capital gains over rental income and that despite the threat of rising interest rates, fixed rate mortgages have remained unpopular, with less than 3% of lending commitments to owner–occupiers being fixed in the first half of 2010.
Ingemarsson comments, “When rates were near their high point in March 2008, 25% of lending commitments to owner-occupiers were fixed. These mortgagors fixed their rates at the worst of times and may thus be wary to opt for a fixed rate mortgage in the future.”
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