As national house prices continue to climb, it seems that more Aussies not convinced that now is a good time to buy property.
That's the findings of Finder’s Consumer Sentiment Tracker (CST), the largest chronological consumer survey in Australia, which has now been running for 24 consecutive months.
Home buying sentiment is low
Surprisingly, Finder’s Property Positivity Index shows that the proportion of Australians who think now is a “good time to buy” is at its lowest ebb since lockdowns started last year.
As of May 2021, the index is sitting at 49% – only a few points higher than the pessimistic low of 42% in April 2020.
In December 2020, a record-high number of people (67%) said it was a good time to buy, however, this figure has since dropped by 18 points.
Graham Cooke, head of consumer research at Finder, said that Australians’ property optimism has yoyoed throughout the past 12 months.
“As lockdowns rolled out across Australia and open house inspections declined, Finder’s Property Positivity Index nosedived only to recover again as the housing market sprang back to life.
“Both the rock-bottom cash rate and FOMO have turbo-charged prices but fears of a property bubble are making many Aussies pessimistic that now is the time to buy,” he said.
Property positivity toward prices spikes
Despite fewer people thinking now is a good time to buy, approximately 74% feel that property prices in their area will continue to rise over the next 12 months – up from a low of 24% in April 2020.
When asked about whether prospective first-time buyers with a deposit saved may miss an affordability window if they do not purchase within the next year, Finder’s RBA panelists were divided.
In total, 9 experts said they would miss out (64%), while the remaining 7 (36%) said they wouldn’t.
Dale Gillham, stock market analyst from Wealth Within said buyers would not be missing a window.
“This situation has been talked about since Adam was a boy and it will continue to be into the future. I have never seen a time when we thought property was cheap for anyone let alone first-time buyers,” he said.
Rebecca Cassells of Bankwest Curtin Economics Centre said buyers may miss a window if they don’t buy.
“Increased house prices driven by significant stimulus and low interest rate environment has the potential to lock out future first home buyers by making it even harder to come up with the deposit needed to enter the market.”
Cooke said that window of opportunity or not, there’s been a significant turnaround in property price expectations over the past year.
“The last 6 months resulted in the largest amount borrowed to buy housing in any 6-month period in Australian history. The property market really is surging back into life,” Cooke said.
We’re back to being happy
Finder’s Australian Happiness Index – a representation of the average percentage of Australians who said they were happy at the time of survey completion – took a steep decline as lockdowns rolled out across the country.
The index fell from an average of 78-79% in the 13 months to February 2020, to a low of 69% in April 2020.
From there, the index recovered somewhat in June and July, before falling again in August as a state of disaster was declared in metropolitan Melbourne.
Since then, the index has fully recovered, averaging around 80% for every month of 2021.
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According to Cooke, Finder’s Australian Happiness Index is a great way to gauge the general level of unease in society.
“The first year of the study saw little movement, but sweeping COVID-19 lockdowns and general financial unease caused a significant dip in the index.
“Since the index recovered in January 2021, Aussies have reported being more consistently happy than in the 12 months before the pandemic.
“When you look at how well we have done with the virus versus other countries this might not be surprising,” he said.
One of the most interesting questions Finder asked Australians in their CST is how much they add to their savings accounts each month.
The average amount reported has increased significantly through the pandemic.
This figure hovered around $600-$700 between May 2019 and March 2020.
A combination of economic uncertainty, government stimulus and cash saved due to working from home has encouraged many Australians to increase the amount they dump into their savings account each month.
The average savings shot up to $989 in June, before falling back somewhat – but still remains significantly above pre-pandemic levels. It currently sits at $889.
This is a hugely encouraging trend – it's great to see the average amount saved going up, especially with the cash rate so low.
However, most economists were doubtful that this trend will hold. When asked, 14 of the 16 economists surveyed (88%) said it would not.
Stephen Halmarick of Commonwealth Bank said that a large part of those savings came from government income, which will now disappear.
Tony Makin of Griffith University agreed, saying the savings boost was triggered by uncertainty.
However, Craig Emerson of Emerson Economics disagreed, saying Australians would remain cautious about the future path of the virus and continue to save at their current rate.
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