- Housing-related sentiment had started to improve from its historic lows.
- Buyers agents say there are good buyer opportunities than the past two years.
- But economists say it will really improve once interest rates stop increasing.
Home buyers have a stronger chance of getting into the property market this spring than during the pandemic-era boom, but experts are mixed about whether even better buying opportunities lie ahead.
While some economists say the benefit of property price falls has been largely cancelled out by the rising cost of home loans and it will take time for affordability to improve, other industry figures say potential buyers have more homes to choose from and less competition now.
With more homes to choose from and less competition, buyers have better opportunities in the property market that avoids the frenzied action of last year. Credit:Eddie Jim
Housing sentiment has edged up from its historic lows, but the mood on the ground is still downbeat, the Westpac-Melbourne Institute Index of Consumer Sentiment, released on Tuesday, found.
The ‘Time to buy a dwelling’ measure rose 2.9 per cent in the past month, but is still in pessimistic territory, where it has been for the last six months. At 80.5 points, it is down 39 per cent from its peak in November 2020.
Another indicator showed more consumers expect house prices to rise over the next 12 months than to fall. The House Price Expectation Index also rose by 3.6 per cent to 100.6 points, nudging back into positive territory.
Australians’ confidence around housing-related sentiment has begun to tick up, albeit off historic lows.Credit:Peter Rae
This was largely driven by NSW (up 6.2 per cent) and Victoria (up 33 per cent). It was down sharply elsewhere, including Queensland (down 13.9 per cent) and Western Australia (down 13.1 per cent) where price falls have been modest to date in comparison.
At the same time, Commonwealth Bank released its latest Household Spending Intentions Index, which showed a modest improvement in housing-related confidence.
Its Home Buying Index rose 10 per cent in August after two previous months of declines, but remains 23.6 per cent lower year-on-year.
Westpac senior economist Matthew Hassan said rapid interest rate rises have hampered buyers’ power in the market.
Home buyers are facing higher mortgage repayments despite lower prices than six months ago, as rates continue to rise.Credit:Dylan Coker
“Your ability to borrow is constrained, and it doesn’t compensate for the price correction you’re seeing today,” Hassan said.
“Lower prices aren’t going to draw buyers out into the market until they get more comfort around interest rates; that they are not going to go higher, and they may fall.”
Once rate rises top out and stabilise, buyers will see an improvement in affordability, Hassan said.
But some buyer’s agents took a different view, saying there are plenty of good opportunities to buy property now as there are more homes for sale to choose from and less competition from other buyers than during the boom.
They encouraged buyers to focus on choosing the best home for them rather than trying to time the market.
Buyer’s agents say buyers should not focus on timing the market, but instead buy the right home for them.Credit:Flavio Brancaleone
In Sydney, which has led the downturn, senior buyer’s agent Paul Wilcox at Oasis Skeen said it was a good time to buy for homeowners who have finance approved, even if there are some further price falls on the cards.
“It’s always a good time to buy when you want to buy or you’re comfortable in your job. The market should not dictate when you should buy,” Wilcox said.
But he said if buyers were trying to time the market, then Sydney already had more favourable conditions.
“Prices have come down circa 15 per cent [in some pockets of Sydney], there’s limited competition. You’re not overpaying for a property in a buyers’ market,” Wilcox said.
“In a booming market, everything sells on main roads, south-facing backyards because people have to make a quick decision or a compromise.
“In a soft market they have more time and can be a little bit more selective buying the right home.”
He said buyers should take the long-term view of buying the home they need for their life stage rather than trying to time the bottom of the market.
In Melbourne, where property values have not fallen quite as far as in Sydney, Wakelin Property Advisory director Jarrod McCabe said this spring offers a good opportunity for potential buyers as more homes are listed for sale.
“It’s been a pretty frustrating two or three months because there hasn’t been much to look at, but we’ve started to see a little bit more coming on,” he said.
The limited supply of homes for sale has helped auction clearance rates to hold up, but he expects auction results to weaken as spring progresses.
There are fewer bidders around to compete with than during the boom, which he said can be good news for buyers. But some parties are caught off guard when they realise there is still competition for the most desirable homes, he said.
He is not convinced there will be a better market for buyers coming around the corner. If prices fall much further, home owners who do not have to sell will hold on to their properties, which will reduce the choice on offer, he said.
He said it is more important for buyers to purchase a good quality property than to pick the bottom of the market, and some homes listed for sale now need renovations or have other compromises.
“Asset selection is always more important than trying to buy at the right time,” he said.
With Elizabeth Redman
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