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A major rebalancing in housing activity towards investors and away from owner-occupiers is currently taking place, new data has revealed.
Westpac’s latest sentiment survey has pointed to a clear shift in housing activity towards investors and away from owner-occupiers, as the ‘time to buy a dwelling’ index clocked its fifth monthly decline in a row to outright pessimistic territory for the first time since April last year.
According to the big four bank, surging prices and rapidly deteriorating affordability are clearly starting to weigh heavily on buyers, suggesting owner-occupier activity, particularly first home buyers, is likely to fade.
But while the bank does expect investors to assume a dominant role in the current surge in housing activity, its survey revealed an unfavourable rating for ‘real estate’ in recent weeks.
In fact, when asked about the ‘wisest place for their savings’, Westpac’s survey participants noted a clear preference for bank deposits (29 per cent), followed by paying down debt (19 per cent), with real estate garnering the attention of only 9.5 per cent of consumers.
That continues the run of very low reads seen for real estate over the last year – the long run average is 25.9 per cent.
Westpac explained that while the findings might seem at odds with the bank’s expectation that investors are set to dominate, bullish price expectations are expected to be enough of a drawcard for many investors.
“The extent to which we see a wider shift in sentiment towards the asset class remains a key uncertainty,” Westpac said.
In March, the value of investor home lending increased at the fastest rate since July 2003.
As such, following its rate decision earlier this month, the Reserve Bank of Australia warned investors that it is now watching them very closely.
Namely, the bank said that as investor borrowing increases, “the bank will be monitoring trends in housing borrowing carefully, and it is important that lending standards are maintained”.
This plays in with the expectation that as early as next year, the bank could move to enact macro-prudential measures to slow price growth and act on the creation of inequality.