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Despite booming investor activity in property markets across the country, an increasing number of people believe the next 12 months is not the best time to buy.
The QBE Barometer 2014 report released last week is based on a survey of current mortgage holders and those intending to buy residential property, either as an investment or home, in the next five years, and revealed there has been a significant drop in perceptions that the next 12 months is the best time to buy.
The report said speculation about interest rate rises and the impact of the federal Budget had changed perceptions about the best time to buy.
Only 36 per cent of mortgagors and intenders think the next 12 months is the best time to buy property, compared to 42 per cent in last year’s survey. The proportion of respondents looking to buy in the next five years has increased, from 35 per cent in 2013 to 39 per cent, indicating “people may be delaying purchase until they think the market has improved”, the report said.
A belief that ‘imminent’ rate rises will ease property prices was cited as a prevailing reason for purchasers holding off.
“There has also been a significant shift in sentiment on property prices and interest rate changes in 2014,” the report said. “Belief that prices will fall has almost doubled from 25 per cent to 43 per cent.”
The QBE Barometer also reported that the influence of foreign investment on property prices is a growing concern, but said the current level of fear in the market is somewhat misplaced.
“In 2014 there has been significant media interest in the impact of foreign investment on property prices in Australia. Foreign investment in residential property is certainly perceived as an increasing threat, with two-thirds (65 per cent) of intenders now concerned foreign investment will make property unaffordable versus 56 per cent in 2013,” the report said.
“While foreign investment in Australian property has been increasing (with the latest statistics indicating this investment reached $17 billion in 2012/2013), it should be noted that foreign investment into residential property is subject to approval by the Foreign Investment Review Board (FIRB) and is restricted to the purchase of new dwellings.
“Analysis of FIRB data by the RBA suggests that foreign investment is largely concentrated in high-density new dwellings within the inner-city areas of Sydney and Melbourne. Furthermore, the average price point for approved foreign residential property purchases is approximately $650,000. Due to a combination of these factors, it is unlikely that foreign investment is responsible for much ‘crowding out’ of first home buyers whose average price points are significantly lower. It should also be noted that foreign investment may also be contributing to a stimulation of the construction market, which will assist in lessening housing supply issues which continue to persist across most state capitals.”