Only 39% of Australians think it’s a good time to buy property right now, as prices skyrocket

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  • New survey data from Finder shows property buyer sentiment has plummeted in the past six months, off the back of a housing price surge that has impacted almost every part of the country.
  • Only 39% of respondents in June said they thought investing in property was a good idea, down from 67% in December last year.
  • The dip in buyer sentiment reflects the impact of Australia’s hot property market in 2021, which has seen massive price spikes.
  • Visit Business Insider Australia’s homepage for more stories.

Record low interest rates and a raft of incentives for first-home buyers haven’t been enough to counter skyrocketing property prices, with Australians increasingly considering buying at the top of the market a bad bet.

The latest insights report from Finder showed that buyer sentiment, which is measured by the proportion of Australians who say now is a good time to buy, dropped to 39% in June.

This marks a significant drop from the 67% who expressed positive sentiment in December 2020.

Finder’s data shows that even in April of last year, when the country was in the grips of a national lockdown following the outbreak of the pandemic, 42% of survey respondents still believed it was a good idea to enter the property market at that time.

The report suggests this outcome may have been influenced by warnings by some economists early last year that home prices would drop by up to 30%.

In May, the federal government budget outlined three new initiatives to give Australians a lift onto the property ladder, with a government guaranteed loan with a 2% deposit for single parents, and 5% for first home buyers.

It also announced the First Home Super Saver (FHSS) would be broadened, permitting Australians to drain $50,000 from their super accounts to put towards purchasing a house.

Graham Cooke, Finder’s head of research, said he believed the recent drop in sentiment, which was based on polling carried out before NSW and other states went into lockdown, was for “very different” reasons to April last year.

“The first low in April 2020 was caused by fear that house prices would be unstable,” Cooke said.

“This new low is being driven by the opposite fear – that house prices have already risen to such a degree that they are unaffordable to most Australians,” he said.

In early June, data from CoreLogic showed that Sydney median home values were rising at a rate of $1,000 a day, a factor that pushed the average New South Wales home above the $1 million mark for the first time.

Figures from May showed that national prices soared 2.2%, the second fastest month of growth, topped only by March when prices jumped 2.8%.

Cooke said the current lockdowns could also impact general consumer confidence — depending on their length.

He said if the current Sydney lockdown runs for the expected 14 days, it is unlikely to have an impact.

“If, however, the outbreak is not contained and the lockdown continues for three or more weeks, we could very well see uncertainty return and consumer confidence take a plunge,” he said.

Economist Saul Eslake told Finder.com.au that buyers’ concerns about the increasing unaffordability of housing were justified.

“We once again find ourselves in a position where house prices are rising at a significantly faster pace than household incomes,” Eslake said.

However other experts have suggested the boom in housing prices was unlikely to continue at the pace of the past six months for much longer.

Cameron Kusher, director of economic research at realestate.com.au, said in late June that while property prices were likely to rise until 2022, the current rates of growth would likely slow; a factor that could improve prospective buyer’s views on the market in the second half of the year.

Kusher named several factors he said would culminate in a slowdown, including fixed mortgage rates, regulation in the form of tightening lending standards, the winding back of government stimulus and weakening demand; and the potential that closed borders into 2022 could lead to oversupply in the market.

He said that right now the housing market was continuing to record high demand and sales volumes, the property market was starting to slow.

“While the market is still booming, some of the heat has already come out of the market,” Kusher said.