Recent bank rate rises cause one-fifth of Aussies to cancel home buying plans: Survey

Alistair WalshMarch 7, 20120 min read

More than one-fifth of Australians scrapped plans to buy a home this year following interest rate rises by the big four banks last month and buyer confidence remains low, according to a survey by Real Estate View.

The Appetite to Buy Survey found buyers remain cautious, with just 32% of Australians now looking to buy a home this year, down from 43% in 2011.

Despite 22% of respondents reporting cancelled plans due to bank rate rises, 65% of respondents were not encouraged to buy following the November and December interest rate cuts.

More than 40% of respondents expected further interest rate rises would keep buyers out of the market this year.

The survey also found more than half of consumers are now considering borrowing from or refinancing with smaller lenders after banks raised their rates independently of the RBA in February.

There are more factors than interest rate rises affecting consumer confidence, says Real Estate View general manager Petra Sprekos.

“Our survey shows that while interest rates are a key concern for buyers, there are other factors such as household expenses and job security influencing their ability to purchase,” says Sprekos.

“Consequently, we’re finding most are adopting a ‘wait and see’ approach. We definitely don’t see this changing anytime soon, especially if the big four break ranks with the RBA again and raise mortgage rates this month.”

Australians are being more conservative with their money, with a rising trend for consumers to hoard money. One-fifth of respondents had saved a deposit of more than 40%, while one-quarter had saved a deposit between 11% to 20%.

Almost 80% of respondents say they would prefer to buy a house over a townhouse, apartment or unit.

“Three-bedroom homes remain the clear front-runner for buyers (44%), followed by two-bedroom properties (27%) and four-bedroom houses (27%),” the survey found.

There was also a rise in people looking to buy properties worth more than $1 million. The figure is up significantly from 2011, rising from 1% to 4%.

“[This suggests] buyers are keen to capitalise on cooling prices at the top end of the market.”

The number of people looking to buy properties worth $400,000 to $600,000 remain stable at 34%, up slightly from 31% in 2011, “indicating competition will stay strong in this market segment”.

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{module What do you intend to do given the current interest rate fluctuations?}







Alistair Walsh

Deutsche Welle online reporter
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