WA housing market sentiment positive: Survey

03/12/2007 - 10:46

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Mortgage Choice's annual consumer sentiment survey has found Western Australians are overwhelming positive about the state's housing market and economic future, despite the threat of further interest rate hikes.

WA housing market sentiment positive: Survey

Mortgage Choice's annual consumer sentiment survey has found Western Australians are overwhelming positive about the state's housing market and economic future, despite the threat of further interest rate hikes.

The independent online survey completed in early November, in which 96 per cent of respondents were property owners, found 89 per cent were confident that the country's economy will be strong during 2008.

Despite the global credit crunch, rising housing prices and home loan affordability problems, sentiment has increased considerably from last year's 76 per cent.

Mortgage Choice national manager corporate affairs Warren O'Rourke said the WA survey outcomes provided an interesting insight into the general public's expectations of and plans for the short-term future, especially in terms of property investment.

"There has been a significant uplift in consumers' perception of the country's financial situation. Sentiment increased by 20 percentage points and interest rates and economic management at federal level are the top two concerns, followed by petrol prices. Consumers continue to have a positive outlook on property and their finances," he said.

"With housing loan approvals still very healthy, though at a more reasonable pace, the results indicate this trend should continue with almost half the respondents - 46 per cent - planning to invest in property in the next 12 months. This compared to 40 per cent last year".

Nationally, that number was 44 per cent with Victorians the most likely to invest in 2008 (47 per cent) and Tasmanians the least likely (36 per cent).

Interest rate concern is almost certainly on the increase, with 42 per cent of WA respondents saying it was their biggest concern for 2008. 44 per cent said the same in last year's survey but that survey did not have available as an answer 'economic management at a government level', which was the second biggest concern at 20 per cent. Petrol prices came in third at 19 per cent (ranked second previously), followed by falls in house prices (9 per cent) and job security (4 per cent).

South Australians were the most concerned about rates (56 per cent choosing this answer) and Queenslanders the least (38 per cent).

Further on rates, 93 per cent of WA respondents believed they will rise in the first quarter of 2008. Nationally, there was a strong consensus across states, sexes and ages (a maximum variation of three percentage points).

Will they be able to afford it? Of those WA respondents with a mortgage, 18 per cent could not afford any increase (21 per cent nationally), 21 per cent could afford a 0.25 per cent increase, 20 per cent could afford a 0.5 per cent increase, 5 per cent could afford a 0.75 per cent increase and a lucky 31 per cent could afford a 1.0 per cent increase.

There was an upside to the current housing market situation when it came to the effect of the widely publicised 'rental squeeze' on property prices, which 94% said was happening. 19 per cent said prices are rising quicker and it was affecting them in a negative way (i.e. increased rent) however 18 per cent said the price rises were affecting them in a positive way (i.e. increased rental income). 57 per cent said prices were rising but it wasn't affecting them at all.

Tasmanians were least likely to see the rental squeeze affecting property prices (86 per cent) and Queenslanders were the most likely (94 per cent). 93 per cent of West Australians saw the rental squeeze affecting property prices.

Fewer WA respondents (39 per cent) believe that housing prices will increase over the next 12 months when compared with last year (45 per cent). 44 per cent believed they would remain stable, 15 per cent thought they would decrease and 3 per cent said they didn't know.

74 per cent of respondents saw Australia's current economic environment as making it harder to save for a deposit than 12 months ago. There was less than five percentage points difference between states for this question.

More than two thirds of all WA respondents, 72 per cent, know someone who is priced out of the property market because they can't afford the mortgage repayments. It is West Australians who see this happen the most and Victorians see it the least (59 per cent).

Of the 46 per cent of West Australians planning to invest in property in 2008, 91 per cent were making sacrifices to do so. This was quite an increase from last year's 80 per cent. The most common sacrifices were: cut back on spending (29 per cent), miss an overseas trip (9 per cent), purchase a less expensive property (7 per cent), remain in current job (6 per cent), take on an additional job (6 per cent), change jobs for a higher income (6 per cent), purchase in a non-ideal location (6 per cent) and a further 4 per cent were planning to move back in with their parents to save on rent.

Nationally, the first three most common sacrifices were the same for all age groups i.e. 18-54 year olds.

West Australians were the least likely to be sacrifice-free (9 per cent) and Tasmanians were the most likely (15 per cent). The largest state-based gap was with the 'cut back on spending' answer, with 29 per cent of New South Welshman sacrificing in this way comparing to 16 per cent of Tasmanians.

 

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