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A quarter of Aussies believe it’s the best time to buy a property

Tony Ibrahim avatar
Tony Ibrahim
- 4 min read
A quarter of Aussies believe it’s the best time to buy a property

A quarter of Australians believe the pandemic and its subsequent response has led to the perfect conditions to snap up a property, according to a bank’s research.

About 26 per cent of people surveyed by ING believe it’s the best time to buy a property, as they look to take advantage of five continuous months of falling property prices.

The nationally representative survey, of 2075 people over August and September, offers an insight into how people have been managing their money during a pandemic and where they’re likely to invest it.

“The research suggests COVID-19 has left many Aussies cautiously thinking about how they can invest to take greater control of their financial future,” Julie-Anne Bosich said, head of home loans at ING.

“While, understandably, not everyone is in a position to use their finances to invest, our research has found that for those who are, the preferred investment choice is property, especially in the current climate where interest rates are at a record low.”

Properties shed an average of $12,500 since the beginning of the year, according to the Australian Bureau of Statistics (ABS), but analysts predict a recovery is on the horizon.

Home lending is at a record high

Home loan lending has hit a record high even though the country is grappling with a pandemic, the most recent ABS figures suggest.

Australians looking to buy their own home secured $16.3 billion in owner occupier loans for 12,302 properties in August, a 13.6 per cent surge representing the largest increase since records were established 18 years ago.

The result surpasses the previous record of 10.7 per cent in July, doubling down on a trend indicating an economic recovery is taking place in an otherwise uncertain climate.

The rebound in home loan borrowing and buyer optimism defies what’s typically expected of a country that entered a recession when it shrank by 7 per cent in the June quarter, Craig James said, chief economist at CommSec.

“This is not your typical recession … Aussies are embracing housing like never before,” he said.

“Not only have home loans posted record gains in July and August but the value of loans has never been higher.”

Underwhelming performance in investor loans held back August’s overall lending figures, but the survey’s findings suggest a returning appetite.

Property is a sure bet, investors say, but they can’t agree where

About 44 per cent of people surveyed by ING believe property is the strongest investment option. Among millennials, the sentiment sits at 50 per cent.

The cash rate has idled at 0.25 per cent since March, its lowest level in 30 years of record keeping, pushing interest rates on mortgages down. About 32 per cent of people surveyed said the low cost of servicing a loan made the significant decision to buy a property worthwhile.

About 27 per cent said the climate was right because property prices have been falling.

Could this be the turning point for investors?

The sting of the pandemic has been felt by property investors, particularly those in capital cities, where vacancies are up on account of border lockdowns. The swirling circumstances has had an impact on investor borrowing.

The number of investor loans issued in May was valued at $4.1 billion, according to ABS figures, a low not seen since 2002. August’s result of $5 billion, an increase of 9.3 per cent in a month, suggests a modest recovery could be underway.

There’s also been a shift away from properties in city areas, the property investment professionals of Australia (PIPA) said. A recent survey found 61 per cent of investors still intended on buying in a city area, a drop of 12 per cent over the year before.

More investors were turning to the countryside, although they represented a minority. About 22 per cent said they’d buy a regional investment property, an increase of 7 per cent.

Regional property prices were not as volatile as those in the city as they were less likely to rely on international travel, Tim Lawless said, head of research at CoreLogic.

“The relatively steady conditions across the regional markets of Australia can probably be attributed to factors such as less impact on housing demand from stalling overseas migration; close to 85 per cent of Australia’s net overseas migration flows into the capital cities,” he said.

“Also there likely remains some momentum in the trend towards rising demand for lifestyle properties that was prevalent prior to COVID-19.”

Disclaimer

This article is over two years old, last updated on October 26, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.