A series of industry reports recently have confirmed the best kept secret that Australians in the property market have become more optimistic about house prices.
The standout finding from lender, ME’s latest Quarterly Property Sentiment Report, was that 38% of respondents expect property prices will rise, which is up from 32% in April. Moreover, respondents across all major cities had a more positive outlook, and improved expectations were recoded across all property status types. ME’s Group Executive Customer Banking, Craig Ralston said, “Australians in the property market have become more optimistic about house prices, perhaps reflecting a number of changes in the external environment since the last survey.”
Stronger lending points to real estate surge
The value of new lending commitments to households rose 3.9% in July 2019, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) figures[i]. The rise in new lending to households in July follows a 1.9% in June 2019. ABS Chief Economist, Bruce Hockman said: “In July, growth in new lending commitments to households was the strongest since October 2014.”
Bruce continued, “For the second month in a row, there were particularly strong increases in the level of new lending commitments for owner-occupier and investment dwellings.”
Angus Raine, Executive Chairman Raine & Horne said improving property sentiment augers well for the spring selling season. “This year, many signs are pointing towards a solid selling season including the availability of credit, the possibility of further interest rate cuts, political stability, and auction clearance rates in some cities above 70%.
“Besides, we have already seen some price rises over the past two months in Sydney and Melbourne. No wonder property market confidence is collecting steam.”
Investors back with lending up 4.7%
Moreover, the certainty about negative gearing and stamp duty policies is encouraging investors to start competing in more significant numbers with first and second home buyers in many entry-level markets. The latest data from the ABS shows that lending for investment dwellings rose 4.7% in July with rises across all states and territories.
“This is great news for those considering a property sale. However, it means first home buyers need to get their skates on and purchase before the market goes on a run again,” said Angus.