Signal the housing boom is just beginning
Good vibes have been reverberating through the real estate market this week, signalling a post-pandemic recovery is in full swing.
ME's Quarterly Property Sentiment Report released on Tuesday showed that positive sentiment among buyers and sellers has soared.
When compared with ME's last quarterly report, the findings demonstrated that investors and owner occupiers are "considerably more positive" as sentiment increased by 15 and 17 percentage points respectively.
The pick up in positivity was reported across all states and territories with Queensland recording the highest levels - 56 per cent in metro areas, 58 per cent in the regions.
Around 72 per cent of buyers said stimulus measures such as HomeBuilder, first-home buyer incentives and the stamp duty relief offered in some states made buying a home, or investing in property "more attractive".
Record low interest rates were motivating 79 per cent of potential buyers surveyed.
Claudio Mazzarella, ME's head of home loans and personal banking, said the high level of confidence was a reflection on Australia's resilient real estate.
"While there are still many challenges such as unemployment and job insecurity, it's promising to see how sentiment and market activity have rebounded," he said.
"We expect to see investors back in full force this year. Sentiment within this group is bouncing back, with low interest rates make investing in property a more attractive option," he added.
Great expectations for 2021
"A busy spring property season has overflowed into the start of this year and all signs point to raised levels of activity continuing for the coming months. This will be especially beneficial on the supply side, offering prospective buyers more choice, ultimately helping the economy," Mr Mazzarella said.
According to CoreLogic national home value index, home values rose in January, up 0.9 per cent over the month nationally.
This movement takes Australian home values to a new high, surpassing pre-COVID levels by 1 per cent, and the index is 0.7 per cent higher than the previous September 2017 peak.
Despite COVID-19 still rocking global economies, ME's report showed that 77 per cent of respondents believed property prices would bounce back this year and 43 per cent said they were not worried about COVID-19 impacting the value of their property.
Only 7 per cent of those surveyed said they thought property prices would go down in 2021.
"It's clear from our latest report that most Australians anticipate a strong uptick in residential property prices. The data also shows a general increase in people's sense of wealth and financial confidence as a result of these price movements," Mr Mazzarella said.
"The flip side to higher property prices is that it will make it harder for first-home buyers to get their foot in the door. It will be important for new entrants in the property market to do their research," he said.
Making up for lost time
New ABS Lending Indicators data released this week revealed another record high, with the total value of new home lending increasing for the seventh consecutive month in December. The rise - an eye-popping 8.6 per cent, to reach $26 billion - is up 31.2 per cent compared to a year ago.
It was new dwelling borrowing that paved the way, with the value of construction loans rising by 17.1 per cent from the month prior and a whopping 122.4 per cent since the HomeBuilder grant was introduced in June 2020.
First-home buyers were also very active, with the number of loan commitments up 9.3 per cent in December and up 56.6 per cent over the 12-month period.
Steve Mickenbecker, Canstar group executive of financial services, said the ABS data showed a strong vote of confidence in a "bullish outlook" with no signs of things slowing down.
"The end of home loan repayment pauses and JobKeeper will still present a headwind in March, but the current momentum of the property market is such that any slowdown, or correction, is looking likely to be shallow and short lived," he said.
"Supply of property for sale is still constrained, with listings in some capitals down 30 per cent on January 2020, and until more sellers can be encouraged into the market we will continue to see prices on the up," Mr Mickenbecker said.
"First home buyers and home builders continue to rush into the market, encouraged by record low interest rates and the generous government incentives," he said.
Originally published as Signal the housing boom is just beginning