But sentiment around taking a mortgage falls, report shows
Optimism is returning to the property market, with more prospective homebuyers indicating that now is a good time to buy, according to a latest NAB property report.
It comes as property prices have entered a downturn. The latest CoreLogic figures show six months of consistent declines in the national Home Value Index, values having fallen a further -1.2% in October. The rate of declines remained diverse across regions, with CoreLogic research director Tim Lawless saying that “It’s probably still too early to claim the worst of the decline phase is over”.
A report on housing intentions and motivations for the third quarter, released by NAB in October, shows optimism is starting to return to the market. Of those surveyed, 23% said it was a good time to buy a home, up from 18% in the second quarter.
The quarterly rise follows six straight quarterly declines, and sentiment is now only marginally below where it was a year ago, NAB said.
The percentage of those who thought it was a good time to get a mortgage fell to 13% in the third quarter, down from 19% in the previous quarter, and 27% at the start of 2022, NAB said.
Across all states, fewer Australians think now is a good time to get a mortgage, ranging from 15% in Queensland, to 7% in the Australian Capital Territory.
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NAB group executive – personal banking Rachel Slade (pictured below) said a sense of optimism had returned, timed with the typically busy spring selling season, and the smaller, 25-basis-point official cash rate rise in October.
Similar to the broader economy, the housing market was proving to be resilient in 2022, she said.
“The first rate rises in more than a decade have caused concern but signs the pace of rate rises are easing has generated a rebound in confidence through the crucial spring selling season,” Slade said.
Slade said surging rental prices were also likely to be a factor, encouraging investors to re-enter the market, and first-home buyers to escape the rent trap.
“While we expect prices have further to fall, there are reasons for more optimism than a couple of months ago,” Slade said.
But the report findings did not indicate the same level of optimism from homeowners undertaking renovations, with 60% of those surveyed noting costs were rising.
Those who thought now was a good time to renovate dropped to a new low of 21%, NAB said. The figure was a significant drop from the March quarter’s one in three.
Slade said the survey results showed inflation and labour shortages continued to impact home building and renovations.
“Most Australians aren’t confident they will be able to renovate in a timely, cost-efficient way, although there is hope price hikes will start to moderate into 2023,” Slade said.
Do-ups were more likely to struggle to find buyers, while those that were “move-in ready” often drew strong demand, particularly given the relative lack of supply, she said.
“We are focused on giving buyers the confidence and support to buy their dream home with fast approvals, while making sure existing homeowners know their options and have help available for anyone worried about rising rates,” Slade said.
According to the report, confidence in buying a home lifted across most states, with the exception of the Australian Capital Territory, which eased from 27% thinking it was a good time to buy in quarter two, to 20% in quarter three.
Confidence was highest in Victoria (27%), followed by Western Australia and NSW (25%), South Australia and Queensland (19%), with confidence to buy weakest in Tasmania (18%).
The number of those surveyed who thought it was a good time to buy an investment property was steady, at 21%. The quarterly increase was strongest in NSW (24%), followed by Western Australia (21%), Victoria (20%), Queensland and South Australia (18%). Sentiment fell sharply in the Australian Capital Territory and Tasmania, to 10%.
Around three in 10 Australians thought it was a good time to sell their home or investment property, at 32% and 30% respectively. Sentiment around selling was strongest in South Australia for both a home (53%) and investment property (45%), NAB said.
Notably, NAB said findings showed more people in Queensland, Western Australia and Tasmania agreed it was a good time to sell, particularly compared to those in Victoria and NSW, where one in four people thought the timing was right.
NAB said it continued to expect dwelling prices to decline by around 20% across capital cities, from their peak in April 2022. Higher interest rates are expected to impact all regions, but particularly where affordability constraints are most binding, the bank said.
