Fewer people believe that now is a good time to buy
Consumers expect property prices to keep rising although fewer believe now is a good time to buy, a sentiment survey has found.
The Westpac–Melbourne Institute House Price Expectations Index rose by 1.9% in September, indicating more consumers think property prices will increase. The rise follows a 7.6% gain in the index in August.
Expectations of house price growth are now 25.5% above where they were in July 2012 and 7.4% higher than in July 2013, the survey showed.
Separate research by RP Data shows dwelling values have risen by 10.9% in the past year, with values having increase by 27.2% in Sydney and by 19.5% in Melbourne during that period.
Since the start of 2009, values in Sydney have risen by a total of 50.1% while Melbourne property values have increased by 46.1%, according to RP Data.
The median house price nationally increased by 2% in the June quarter to $617,232, a report released last week by Bendigo Bank and the Real Estate Institute of Australia found.
Melbourne property gained 3.3% to hit a median price of $658,000, while Sydney’s median house price rose by 3.1% to $811,837, the Bendigo Bank/REIA report showed.
The rapid gains in property prices have started to take their toll on consumer attitudes towards buying.
The Westpac Melbourne Institute Index of Consumer Sentiment revealed an 8.2% fall in the index tracking whether consumers thought now was a good time to buy property. That followed a 9.7% lift in that index in August.
Westpac chief economist Bill Evans noted the ‘time to buy a dwelling’ index was now 23.2% below its peak a year ago.
“Clearly, households are unnerved by rising prices, surmising that affordability issues are constraining the attractiveness of buying a house,” Evans noted.
“As we saw in the recent housing finance statistics, the momentum in the housing markets is clearly moving towards investors who are motivated by prospective price gains and rental yields and less affected by affordability considerations.”
Investor loans accounted for almost half of all mortgages in July, the highest proportion on record, according to the latest Australian Bureau of Statistics figures.
The Westpac–Melbourne Institute survey showed more than one quarter of people thought bricks and mortar was the wisest place for savings. Just over one third favoured bank deposits, while only 8.5% thought it was best to invest savings in shares and 4% opted for superannuation.