The results of a report from a major bank have found that half of property investors looking to purchase another property are afraid of entering into an auction and that there is a clear lack of knowledge of basic financial terms.
The results from Westpac’s latest Home Ownership Report, which surveyed over 1,000 next home buyers (owner-occupiers looking to purchase a home to downsize or upsize), found that over half of property investors are afraid of entering auctions, with 57 per cent saying they are too scared and 58 per cent saying they are not confident in their auction abilities.
These potential buyers could be missing out, as Westpac data shows an uplift in properties being taken to auction and that clearance rates are holding steady at just about 50 per cent.
Will Ranken, Westpac’s general manager of home ownership, said buyers should dispel their fears by researching the surrounding area.
“Auctions can be daunting, but again, by doing their homework and being well prepared, home buyers can feel confident to make the most of current opportunities,” Mr Ranken said.
“To ensure the best chance of success, home hunters should observe several auctions before they bid, thoroughly research the property they’re interested in, and ask the selling agent for comparable sales.”
Other findings from the Home Ownership Report also included that there is a lack of financial education from investors, but there is a readiness to close that gap.
Half of the respondents did not know exactly what equity, an offset account or refinancing means at 53 per cent, 49 per cent and 51 per cent respectively, while more than half at 66 per cent of investors do not know what comparison rates are.
At the same time however, a large majority at 93 per cent also are looking to improve their financial education, 79 per cent are looking for expert help and 44 per cent are utilising digital resources to improve their financial knowledge.
Additionally, 44 per cent of investors feel financially confident.
Mr Ranken said it was encouraging that so many next home buyers are looking to improve their financial education.
“However, more can be done to ensure Australians are fully equipped to achieve their home ownership goals,” he said.
“With the right help and guidance, the process of buying a home can be incredibly rewarding. It all starts with an open and frank conversation with a professional to identify any knowledge gaps.”
Mr Ranken added that next home buyers should do their due diligence and research the loan options that are available to them, specifically mentioning portability and bridging loans.
“A portability loan can be a great time-saver, particularly when already dealing with the emotional stress that can come with moving home,” he said.
“A bridging loan could also be an option if they want to stay in their current property while they build a new home.”