confidence in oz property reaches historic hi

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http://www.mfaa.com.au/default.asp?artid=2429&menuid=381

CONFIDENCE IN PROPERTY MARKET REACHES HISTORICAL HIGH

4 May 2010

More Australians than ever before think prices will keep rising

A record number of Australians are preparing for property prices to increase in coming months, as demand for housing continues to outpace supply.

The latest Bankwest/Mortgage and Finance Association Home Finance (MFAA) Index shows three quarters of Australians (76%) believe prices will rise in the current quarter.

The data shows its the people upgrading or buying their second homes who are fuelling interest in the property market. Three quarters (74.8%) of next time buyers also believe its a good time to purchase investment property up sharply from the record low 14.5% recorded during the height of the credit crisis. In contrast, prospective first time buyers are more cautious about the market, with only 43.7% believing now is a good time to buy compared to 49.7% in the last survey.

According to Vittoria Shortt Chief Executive, Bankwest Retail although interest rates are rising next time buyers are returning to the property market because of confidence in the economy and the jobs market.

Historically, the market has proved a good barometer of home owners confidence in the economy, said Ms Shortt. During the early stages of the GFC house prices slipped, then the market recovered as first time buyers flooded the market. Now the baton has been passed to upgraders who see it as a good time to buy because of a strong economy and confidence in their job prospects.

We are also witnessing the return of investors to the market as a tight rental market see the potential for good rental yields, added Ms Shortt.

Savvy next time buyers are also aware of impending interest rate rises, and are factoring these into their decision making process, said Ms Shortt.

The latest Index has also shown of the many people who are expecting the cash rate to keep climbing, almost half (47.1%) predict interest rates will rise by more than 0.5% within the next 12 months.

Riding the property wave

Interestingly, Australians in all states now feel house prices are headed higher. Of all States and Territories surveyed, Victorians were most likely to think the value of their property had risen (76.3%), comfortably exceeding the average across all states (61.8%).

The biggest improvement in perceived property value has been Western Australia, with only 3.3% of respondents feeling they have lost value compared to 16.7% in the last survey.