First home buyers determined to enter the market

ME’s general manager Andrew Bartolo said encouraging monetary policy and a long-term view of property growth are driving current first home buyers’ sentiments.

“In the case of first home buyers, the recent property price recovery has likely nudged them to get in while they can – as though it’s now or never – and has created a sense of FOMO,” Mr Bartolo said.

“Low interest rates and commentary in the market for the support of first home buyers may have also contributed to an increase in home-buying intentions.”

Despite Sydney and Melbourne closing in on pre-boom prices, first home buyers still believe the property market will continue to rise. 

Over half (55 per cent) of respondents predict prices to rise over the next 12 months compared with 38 per cent who predicted price rises two quarters ago.

Strong house value growth is predicted by Victorians more than any other state; with 67 per cent of Victorian respondents predicting prices to go up – a 10 percentage point jump from last quarter’s prediction, and a 34 percentage point jump from their Q2 2019 prediction.

All other major cities had a more positive outlook on prices than last quarter, including Western Australia where last quarter more were predicting price falls than rises.

Positive house price expectations were seen across owner-occupiers, first home buyers and investors.

The report shows sentiment towards the property market has improved for the third quarter in a row, increasing to net positive 21 per cent (up 3 percentage points from Q4 2019, and up 14 percentage points from Q2 2019 when the report first started).

“Considering a combination of market factors including the buzz of home value growth, a solid spring selling season, plus rate cuts and signs from the RBA that rates will stay lower for longer, it’s no surprise overall property sentiment has improved,” Mr Bartolo said.

Finally, the report found despite growing positivity towards the property market, consumers still view affordability as a key risk and believe the current market lacks options.

Ninety-two per cent of respondents agree that “housing affordability is a big issue in Australia”, up from 89 per cent in Q4 2019.

ME’s report showed, 14 per cent agree with the statement “I’m worried about property becoming unaffordable” – making it the top worry.

The report also tracked the perception of choice in the property market and found almost half (46 per cent) of total respondents believe there is not enough choice, with this figure jumping to 57 per cent among first home buyers.

“Housing supply has picked up slightly, but with prices rising and demand outweighing supply, there’s no wonder that almost one in two Aussies [doesn’t] think there’s enough choice available,” Mr Bartolo concluded.