Confidence in property markets is set to continue to grow following the announcement of a COVID-19 vaccine breakthrough and the easing of lockdown restrictions throughout Australia.
US drug firm Pfizer has revealed that early data from phase three trials showed its vaccine was more than 90% effective against COVID-19, spurring Minister for Health Greg Hunt to move quickly in order to secure 10 million units by March next year.
Markets reacted positively to the announcement with investment and confidence returning to the hard hit retail and office sectors. The forthcoming vaccine, along with reduced bank loan deferrals, extended budget stimulus and lower borrowing costs have also triggered a sharp rise in consumer confidence and property buying intentions.
According to ME Bank’s latest property sentiment survey, consumer sentiment among buyers and sellers in the housing market has returned to pre-COVID-19 levels. ME Bank’s survey, which gives an indication of market sentiment based on a snapshot of 1,000 owner occupiers, found that since the announcement of restrictions easing, over half of property owners or buyers felt more confident about selling or buying. Nearly 40% of respondents in the market said they felt “positive”, lifting to just 4 percentage points below the same period last year.
The survey found that 65% of respondents are predicting house prices to increase or stay the same where they live, while 20% are expecting them to decline over the next 12 months—compared to 46% and 41% respectively in April.
Overall property sentiment
First home buyers, up 7 percentage points since October 2019 to 53 per cent, are now the most likely group to purchase. However, two-thirds of first home buyers pointed to the lack of “choice in the market” while 58% say noted the difficulty to save for a home loan deposit due to the pandemic.
Home-owner worries have also clearly started to ease, with only 49% worried about the value of their property falling in October compared to 64% in April.
Sentiment towards housing affordability marginally improved, but remains a wide-reaching concern, with 88% of respondents agreeing “it is a big issue” compared to 90% last quarter. Expectations on property prices have also returned to within pre-COVID-19 levels.
Westpac’s house price expectations survey also strengthened, jumping 12 per cent to be only 7.3 per cent below its level in March and 5.5 per cent above its long-term average.
Global ratings firm Moody’s Investor Services said it expects most global economies to begin to turn the corner in 2021, with many governments continuing to unwind their support measures for households and companies.