Consumer confidence in the Australian property market has bounced back from a tumultuous FY10 – 15% of Australian adults intend to buy a property this year, according to research from Datamonitor.
Around 7% of Australians plan to purchase their first home in the next 12 months, despite record-low housing affordability due to rising property prices and interest rates. This is up from 6% in 2009.
The first home buyer intentions are surprising considering that most forecast expect first-time buyer demand to be relatively muted this year, Datamonitor analyst Petter Ingemarsson said.
“The strong first-time buyer demand in the survey is largely driven by confidence in property prices,” he said.
A further 8% intend to pick up an investment property, the research firm said.
But only 20% of respondents expect property prices to fall this year, down from 58% last year. And just 2% expect falling interest rates over the next 12 months to be very likely.
While the actual number of houses in demand is much lower than the roughly 2.5 million adults seeking to purchase a property this year, because many people purchase property jointly, the trend is still expected to lead to a significant supply-demand imbalance.
But this imbalance will have only a short-term effect on prices, Ingemarsson said.
“Short or medium term, the supply imbalance might drive prices up further. Long term, however, the rising cost of property in relation to wages is a metric that unavoidably will lead to a price correction. Property cannot rise in value at a faster pace than average wages in the long term.”
The survey tracked 2159 Australian citizens 18 years or over, and had a national coverage and representation.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.