NAB Special Insight Report 2019: How do consumers view the market now and in the future?

New research reveals how Australians are weighing up the housing market.

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With Australian house prices continuing to moderate after 5 years of solid growth (particularly in Sydney & Melbourne), home owners, investors, buyers and sellers are facing a very different property market today. In this report we explore how Australians are weighing up the new opportunities and challenges this market presents. Over 2,000 consumers were asked whether they thought it was a good time to buy, sell, renovate or take out a mortgage, now and in 12 months’ time. We also asked if they’re actually intending to buy, sell, renovate or get a mortgage over the next 12 months and whether they believe house prices in their local area would rise or fall.

Most consumers think now is a good time to renovate their home or buy to live in. But, with prices falling across most of the country, they don’t think it’s a good time to sell their home or investment property. Over the next 12 months Australians are still most positive about renovating their home and buying a property to live in, but there is a lot of uncertainty. So what do consumers actually intend to do over the next 12 months? Overwhelmingly, the majority of Australians plan to sit tight and do nothing. On average, price falls of -2.1% are expected over the next 12 months (against -2.4% forecast by property professionals in NAB’s latest Residential Property Survey). TAS is by far the most positive state, with almost 1 in 2 people expecting a positive price outcome, followed by QLD (1 in 3). Only 1 in 5 consumers in NSW & VIC expect house prices to grow next year. Much larger falls are expected in capital cities than regional and rural areas, with modest growth expected in the bush.

 

Highlights

Is it a good time to buy, sell, renovate or take out a mortgage on property?

  • Overall, most Australians (around 1 in 2), said it was a good time to renovate their home or buy a home to live in. Over 1 in 2 also said it wasn’t a good time to sell their home or investment property.
  • These themes were broadly consistent across states, with one exception – a much higher number in WA said it wasn’t a good time to sell their home (we suspect this result may be influenced by the fact that some home owners in WA may also be sitting on capital losses with dwelling prices some 17% lower than their mid-2014 peak)

Will it be a good time to buy, sell, renovate or take out a mortgage in 12 months time?

  • Consumers were still most positive about renovating their homes and buying a property to live in. They were also noticeably less positive about buying or renovating an investment property or getting a mortgage for a home to live in or for investment.
  • It’s also clear consumers are far more uncertain about the future – around 4 in 1o said they didn’t know if it will be a good time to buy, sell, renovate or take out a mortgage.
  • Interestingly, significantly fewer people in all states were positive about renovating their home. WA was the exception, where far fewer thought it would be a good time to buy a home to live in.

Do consumers actually intend to buy, sell, renovate or get a mortgage in next 12 months?

  • Over 8 in 10 people don’t intend to buy or sell property, get a mortgage or renovate an investment property. But 1 in 5 people do intend to renovate their home over the next 12 months.

What will happen to house prices in the next 12 months?

  • Consumers on average expect prices to fall -2.1% (versus -2.4% forecast by property professionals in NAB’s Q4 Residential Property Survey). NSW (-3.1%) and VIC (-2.9%) are expected to lead the way down, but consumers are less pessimistic than property professionals. TAS is the only state with positive expectations (2.2%).
  • But this masks key differences in perceptions. Australia wide, 45% of people expect prices to fall, but this ranges from 53% in NSW and 51% in VIC to just 14% in TAS. And significantly more consumers in VIC (39%) and NSW (37%) anticipate drops of 5% or more (with 16% and 17% respectively predicting falls of over 10%).
  • TAS is by far the most positive for price growth with almost 1 in 2 people expecting a positive outcome in the next 12 months. Only 20% of consumers in NSW and 23% in VIC expect price growth to turn positive next year.
  • By region the downturn is being driven by expectations for larger falls in capital city house prices (-2.8%), with smaller falls in rural towns (-1.0%) and major regional cities (-0.9%). Consumers living more than 5km from the nearest town (or the ‘bush’) are on average predicting modest growth of 0.6%.