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Homebuyer sentiment shifting

Property investors are flocking back to the market after a hiatus through 2020, new research shows.
ME bank’s latest Quarterly Property Sentiment Report revealed that first home buyers, on the other hand, are growing less confident.

First home buyers recorded the lowest level of positive sentiment this quarter, down three percentage points to 24% while investors recorded the highest at 52%.

“Now that prices have rebounded strongly and affordability is going down, first home buyers aren’t feeling so positive”, ME’s Head of Home Loans and Personal Banking, Claudio Mazzarella explained.

“When property prices and interest rates lowered last year during the pandemic, a unique buying opportunity opened up for confident first home buyers with cash savings and secure employment, while many investors became nervous.”

Mazzarella added that another factor is a fall in the perceived availability of residential property.

“Overall, 60% of survey respondents believe there ‘isn’t enough choice in the current residential property market’ − a 17 percentage point increase since January”, he said.

More regional buyers believe there ‘isn’t enough choice’ (65%), especially in regional New South Wales (71%), compared to metropolitan buyers (57%).

“With more city dwellers moving to sea or tree change areas, supply is dwindling and adding pressure to prices”, Mazzarella added.

Affordability concerns are likely being compounded by expectations for further house price growth, with around 67% of those in the residential property market ‘expecting prices to increase in their area during the next 12 months’ – a 13 percentage point rise since January this year.

While rising prices are dampening the mood of first home buyers, the effect on existing owners is the opposite.

“Rising prices are making property owners feel wealthier, when many buyers are stretching their budgets to afford the limited but growing availability of stock on the market at the moment”, Mazzarella said.

Property owners’ ‘sense of wealth’ and ‘general financial confidence’ increased to the highest levels since ME’s survey began in April 2019 – at 41% and 42%, respectively.
Who’s planning to buy and sell?

In terms of buyer groups, more first home buyers this quarter said they are looking to purchase property in the next 12 months (52%), followed by investors (40%) and owner-occupiers (21%).

Investors appear to be looking to cash in on high prices, with 23% indicating they want to sell their property in the next 12 months, compared to only 11% of owner-occupiers.

By location, Sydneysiders are more likely to buy (38%) and sell (13%) in the next 12 months than Victorians (32% and 10%, respectively).

“Although overall sentiment is lower among first home buyers, our findings show they are still the eager to buy property over the next year.

“There’s also a sense of ‘fear of missing out’ in the current market, which can be a key driver for this behaviour”, Mazzarella suggested.

ME’s findings revealed over half (58%) of those looking to buy ‘feel a sense of FOMO’ (fear of missing out) in buying property in the current market.

“Around 75% of those ‘looking to buy’ said ‘record low interest rates have made buying or investing in property more attractive to them”, he concluded.

About Adam Nobel

CEO | Principal
M. Bus, Grad Dip Adv, B.Int Bus, LREA


0417 007 001

Adam is the founder and Principal of Hugo Alexander Property Group. With a previous career in advertising, 22 years experience in property investment, and 16 years in Brisbane real estate, he knows the market inside out to ensure his clients grow their wealth faster.

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