Aussies remain optimistic on property market, despite falling prices
Falling property prices are making headlines across the country, but some Australians are still expecting prices to skyrocket, a new survey shows.
Despite the national median house price dropping 6.5 per cent last year, according to the latest Domain House Price Report, about two in five people are still expecting price rises.
A survey of almost 2100 people, commissioned by comparison site Canstar, found 5 per cent of Australians expect prices to skyrocket, with an additional 33 per cent expecting steady growth, while a quarter predict prices will remain stable.
“It’s a bit optimistic,” said Steve Mickenbecker, Canstar’s group executive of financial services. “All the data and the last 12 months … suggest that we’d see a further fall particularly in Sydney and Melbourne.”
“It could be wishful thinking,” he added. “But I think [those expecting growth] aren’t people who follow the market that closely … they’re thinking we’ve always had steady growth in property in Australia, why wouldn’t we continue to have it.”
It was in Brisbane, where house prices have been broadly steady, and Tasmania, where they are up 8.8 per cent, that people were most optimistic. About one in two people in both areas expected prices to rise.
However about a third of survey respondents in the weakening markets of Sydney and Melbourne, where house prices fell 9.9 per cent and 8.4 per cent last year respectively, also expected price growth. More than 5 per cent even expected prices to skyrocket, while 9 per cent of Brisbane residents thought the same.
The findings come after a NAB survey of more than 2000 consumers last week found 5 per cent expected prices to rise at least 10 per cent in the next year — with a total of 25 per cent expecting price growth.
On average consumers tipped national prices to fall 2.1 per cent. However, when asked their plans for the year ahead, most consumers wanted to sit tight, said NAB chief economist Alan Oster.
“They’re not going to buy, they’re not going to sell, but [about 20 per cent] are going to renovate,” Mr Oster said.
The bank expects house price drops of 7 per cent and 5.6 per cent in Melbourne and Sydney, respectively, and is forecasting a peak-to-trough fall of around 15 per cent for both cities.
Meanwhile AMP Capital’s chief economist Shane Oliver expects prices in both cities to fall another 15 per cent, after revising down his peak-to-trough forecast to a 25 per cent fall last week.
Credit Suisse is predicting a similar drop for Sydney and CoreLogic’s head of research Tim Lawless has revised his forecast to an 18 to 20 per cent drop for Sydney and Melbourne.
Mr Oster said: “The chances of [prices] skyrocketing are very slim, I would be more in the camp that say they’re going sideways at best.”
Mr Mickenbecker said Canstar’s findings suggested there would be continued demand from buyers in the months ahead, but warned first-home buyers — 12 per cent of whom are expecting prices to skyrocket — to take their time.
“A percentage of first-home buyers could be in panic mode and doing anything to try get into the property market. They shouldn’t be thinking that way,” Mr Mickenbecker said.
The outlook of younger generations was significantly more bullish, noted Mr Mickenbecker, with 21 per cent of Generation Z expecting prices to skyrocket, and 7 per cent of Generation Y expecting the same. Almost half of first-home buyers expected prices to grow, compared to 36 per cent of existing home owners.
He warned existing home owners not to be overly concerned by price falls, as they would reverse in time.
“Don’t get too hung up about [price falls] … if you’re in the market the best thing you can do is make sure you’re budgeting right and getting ahead on the loan if you possibly can.”