A recent study by Mortgage Choice 2010 Consumer Sentiment Survey has revealed that Australian’s passion for property has not waned despite seven interest rate rises since October 2009. In fact the survey indicates that we are more worried about the rising price of electricity and water over the prospects of more interest rate rises in 2011.
The majority of respondents in the survey believed that banks will increase rates before June 2011, many anticipating a rise of between 0.25% to 0.5%. One third of respondents are still hoping to buy a property in the next two years. Of these respondents, around 35% will be buying an investment property, 30% will be purchasing their first home and 34% will be relocating, that is, buying their next home. We are also a renovation nation with a third of respondents planning to renovate their existing property within the next twelve months.
More than half he respondents in both Victoria and NSW / AT believed that property prices will increase in Australia over the next twelve months and just under a third believed prices will remain stable. In regards to the ongoing debate that claims house prices are unaffordable in Australia, about 50 per cent of respondents believe the argument is ‘about right’ while around 30 per cent think it is ‘underrated’ (that is, that housing is even more unaffordable than is being debated), while 12 per cent believe the argument is ‘overrated’.
So what is it that we love about property? Here are the top reasons:
1. “I want to set myself up financially for the future” – 50% of respondents
2. “We trust property investments more than the sharemarket” – 28% and 35% of respondents from, NSW / ACT and Victoria respectively
3. “I want to or need to relocate” – giving us a reminder that property is not only a financial investment but a very practical and fundamental part of our lives
Other popular reasons include:
4. “I want to get my foot in the property market door”
5. Rising rents make purchasing property more attractive”
6. “Tax benefits”
Many respondents were willing to make major sacrifices to get into the property market and these include:
- Cutting back on spending to make a property purchase possible – 90% and 80% for NSW / ACT and Victoria respondents respectively
- Forgoing an overseas trip / holiday (we also know how we Aussies love our vacation!) – 56% and 49% for NSW / ACT and Victoria respondents respectively
- Trying to remain in their current job – this may imply people being in well-paid jobs which they are not enjoying
- Take on an additional job – 15% and 20% for NSW / ACT and Victoria respondents respectively
- Change jobs to get higher income – 10% in both NSW / ACT and Victoria respondents (26.8 per cent in NSW/ACT and 37.3 in Victoria), or purchase in a non-ideal location (26.8 per cent in NSW/ACT and 21.6 per cent in Victoria). Around 10 per cent of respondents said they will move towns or move interstate to a more affordable property market.
Many are also realistic about their desires and said they will be purchasing a less expensive property than desired. Starting a family was also being sacrificed because of the push for property, with 7.3 per cent in NSW/ACT and 13.7 per cent in Victoria saying they were delaying starting a family as their sacrifice for property.
What are your views and concerns?