A third of NSW consumers more likely to buy housing if rates fall further: Mortgage Choice

A decision by the Reserve Bank to cut interest rates next week or at a future date is likely to have the strongest impact on NSW home buyers, according to a consumer survey by Mortgage Choice. 

A third of NSW consumers say they are would be “more likely” to buy a house if there were further drops in the interest rate, significantly higher than the national average of 26%. 

An interest rate cut would spur on 29% of Victorian to consider dipping their toes into the property market, with Western Australians’ sensitivity also tracking above the national average at 27% of consumers. 

Queenslanders and South Australians are the least sensitive to interest rate cuts, with just 21% of them saying they would be more likely to buy if the cash rate fell. 

The survey of over 1,000 consumers was carried out after the 25-basis-point interest rate cut on November 2. 

Alongside their pent-up appetite to buy property should interest rates fall, nearly two-thirds of NSW consumers (64%) believe property is a safer investment than shares, registering the biggest improvement in sentiment towards property over the last 12 month (up 7%) across the five states surveyed.

“With ongoing financial volatility here and overseas, New South Wales respondents are increasingly viewing property as a safer haven than shares. It is interesting to see the impact rising rental costs are having on people’s decision to take the leap into the property market,” says Mortgage Choice acting head of consumer of corporate affairs Belinda Williamson. 

A similar proportion of Victorians believe property is a better investment than shares (64%, up from 3% in 2010) just ahead of WA consumers (63%, down 1%). 

Sentiment towards property over shares increased by 5% among Queenslanders to 61% while South Australia registered a 1% fall with 61% of the state’s consumers preferring property over shares. 

Nationally, property has become more appealing in the ongoing financial turmoil with 63% of the more than 1,000 consumers surveyed by Mortgage Choice believing it to be a safer investment than shares, compared to 59% in 20101. 

NSW consumers are also the most optimistic about the economy, although confidence levels have dropped to 59% saying they were"fairly confident" or "very confident" about the economy, compared with 76% who said the same in 2010. 

Nationally, 56% of consumers were "fairly confident" or "very confident" about the economy versus 75% in 2010 with South Australians the most gloomy, with just over half of respondents (51%) feeling confident about the outlook. 

Other key findings from the national survey:

  • Rental squeeze: 86% feel the rental squeeze is having an effect on property prices in their state. 
  • Property prices: 30% believe Australian property prices will increase over the next 12 months, 28% believe they will decrease, 26% believe prices will remain stable and 16% don’t know. gen Ys were the most adamant about property price rises, followed by gen Xers and baby boomers.

  • The property purchase process: When asked how well informed respondents were about the property purchase process, 17% were "well informed", 34% "know the essentials", 35% have "some idea" and 14% have "no idea".  

  • The switch to fixed: 79% of mortgage holders will consider switching to a fixed term loan only when lenders’ fixed rates fall below 5.75%. 
  • Mortgage buffer: 67% of mortgage holders have only two months’ wages or less as a buffer in their mortgage. 
  • Using a mortgage broker: 64% of all respondents will consider using a mortgage broker in the future



    Larry Schlesinger

    Larry Schlesinger

    Larry Schlesinger was a property writer at Property Observer


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