Financial comfort rises but property owners remain pessimistic: ME Bank July household financial comfort report

Households recorded almost record high financial comfort levels in June, but residential property owners expect to bear the brunt of the COVID-19 downturn until at least 2021, according to the latest report from ME Bank.

"Australian household financial comfort increased 3% to 5.76 (out of 10) in the past six months to June 2020 − just shy of its historical high of 5.78 recorded in December 2014," the July 2020 ME Bank household financial comfort report found.

"Contrary to expectations, financial comfort has jumped the most among typically struggling cohorts such as casual workers, the unemployed, low income households and single parent households (though their comfort levels remain a great deal lower than the average household and higher-income Australians)."

Despite this, the report found that more owner occupiers (25%) expect the value of their property to fall during 2020/21 than rise (22%).

This represents a significant change from just six months ago, when only 6% expected property prices to fall and 47% expected them to rise.

Furthermore, the report found that expectations vary significantly across major capital cities, with occupiers in Sydney less pessimistic than Adelaide, Brisbane and Melbourne.

Perth owner-occupiers are highly pessimistic, with 40% expecting lower prices in comparison to Sydney, Melbourne and Brisbane expecting a fall of 22%, 29% and 27%.

Investors are more optimist about dwelling prices than six months ago, 26% now expect the value of their investment property to rise in the next twelve months.

Across households, those most worried about debt include 51% of those paying off a mortgage compared to 21% of households that own their home.

"Financial comfort levels are up for now, but many households are on the cliff's edge," the report said. 

"Many eyes will be on what governments do in the final months of 2020 and into next year."