Housing market confidence rises to highest since July 2010: CBA/MFAA index

Confidence about the housing market has surged to its highest level in almost three years, with nearly one in two Australians (49.8%) now expecting house prices to rise over the next quarter, according to the latest Home Finance Index commissioned by the Commonwealth Bank and the Mortgage and Finance Association of Australia (MFAA). 

This is the highest confidence level since the July 2010 survey when 52.2% of those surveyed expected house prices to rise over the following quarter and a substantial rise from the 28.9% who were optimistic in the September 2012 quarter and double the number in March 2012 (25%).

The results of the March 2013 survey, carried out by CoreData, are based on the sentiments of 1,361 home buyers and prospective home buyers. 

A high proportion of March 2013 respondents – 40.4% - expect no changes in house prices over the coming quarter, but just one in ten expect house prices to fall, the lowest percentage expecting a decline in prices since March 2010. 

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Source: CoreData

Other findings of the survey also point to greater confidence about the housing market including that 83% of those surveyed who own homes believing now is a good time to buy an investment property compared with 78% in September 2012 and 74% in March 2012.

There was also a surge in the number of respondents who plan to change or upgrade their home. 

More than three-quarters (77.2%) of those respondents who owned a home said they planned to change or upgrade their home compared with less than two-thirds (62.4%) in the September 2012 survey and 67% in March 2012. 

Among prospective first-home buyers, 48.8% of believe now is a good time to buy compared with 42.2% in September 2012 with confidence rising strongly in NSW (from 40% to 50%), South Australia (40.6% to 51.9%) and to a lesser extent in Victoria (39% to 43.8%). 

More than three-quarters of borrowers (76.9%) said they were ahead of their mortgage repayments with only 16.5% saying they were struggling to make payments and 5% admitting to making late payments. Just 1% said they were more than a month behind in their mortgage repayments.

The rising confidence about the housing market came at the same time as people’s financial situations improved combined with a rise in the number of active buyers looking for a home loan over the next year. 

Nearly a third of respondents (30.8%) said their financial situation has improved over the last year – a rise of 14% over March, 2012. 

One in five (18.9%) said they were in the market for a home loan over the next year, up from 12.7% a year ago. 

Mortgage & Finance Association of Australia chief executive officer Phil Naylor says the survey shows that the property market is “definitely recovering, with sentiment of both first home buyers and investors improving dramatically”. 

A similar sentiment is echoed by Kathy Cummings, head of third party banking at the Commonwealth Bank, who says the property market is all about confidence. 

She says the survey confirms that “good times are ahead, especially as interest rates continue to be at historic low levels, creating a situation where mortgage repayments are more affordable than rents in many areas”.