September 14, 2023
A new survey commissioned by Mortgage Choice has found that despite challenging conditions in a property market defined by rising interest rates, lack of housing supply and a rising cost of living, 4 in 5 Australians (83%) believe property remains a good investment.
The top three reasons Australians believe property still makes a good investment are:
- Peace of mind and financial security
- Control of a physical asset
- Good rental returns.
The survey of 1,000 Australians, carried out by Honeycomb Strategy, sought to understand how the current economic environment is affecting Australians’ attitudes and behaviour towards property and their home loans.
Although the survey revealed that many Australians are delaying big life decisions due to the challenging economic climate, it showed most Australians still believe property will provide financial security and strong investment returns.
Mortgage Choice CEO Anthony Waldron said, “It’s a challenging time for many homeowners and hopeful buyers, who have seen rising interest rates erode their borrowing capacity and faced a chronic lack of supply in the property market. Despite our research revealing their understandable concern about entering the market, Australians still see the long-term value in property.”
Challenges for prospective buyers
The survey revealed that 2 in 3 respondents feel it’s harder than ever to find properties, with 44% of all survey respondents feeling it’s a bad time for first home buyers to enter the market.
The sentiment from survey respondents echoed data from the Australian Bureau of Statistics, which showed that the number of new owner-occupier first home buyer loan commitments fell 0.8% in June 2023 and was 12.2% lower compared to a year ago.
The prospective buyers surveyed were split in their feelings about entering the market this year, with 39% of prospective buyers feeling positive about entering the market and 40% feeling negative. Interestingly, 21% of prospective buyers said they had both positive and negative feelings, highlighting the tightrope of hope and anxiety those trying to enter the property market are currently walking. Only 38% of prospective buyers said they were keen to purchase an investment property. Prospective buyers feeling most anxious and overwhelmed about entering the property market are generally younger and on lower incomes, while those feeling most hopeful already own property.
“The uncertainty we’re seeing from prospective buyers in the survey findings is completely understandable and highlights how critical it is to seek professional advice from a mortgage broker when you’re looking to buy property,” said Mr Waldron. “It can be overwhelming navigating a market where interest rates have increased so rapidly. A broker can show you how your borrowing power will be affected by further changes to interest rates, help you understand whether fixing your loan may be a good option and, if you’re a first-time buyer, whether you might be eligible to access a grant or scheme.”
Positive sentiment from sellers
The survey revealed that those looking to sell their properties are the most upbeat about the market. Over half of the survey respondents who are actively selling their property are feeling optimistic about selling. Sellers are also much more likely to think interest rates will drop by the end of 2023, compared to the rest of the market, with 32% of sellers saying they think interest rates will fall, compared to 19% of all mortgage holders surveyed.
The survey results align with data from PropTrack, which indicates that the Spring selling season started early this year. The data reveals that auction activity picked up markedly over August, with more than 2,000 homes headed to auction as seller confidence continues to recover. With interest rates at or close to their peak, buyer confidence is returning, prices are rising, and clearance rates have improved, leading more vendors to consider selling at auction.