December 2, 2010
A consumer survey, released today, shows Australians’ passion for property is not waning. In fact, the survey suggests we’re more worried about the rising price of our electricity and water bills than we are about rising interest rates in 2011 – even though we expect more rates rises to be coming.
The Mortgage Choice 2010 Consumer Sentiment Survey has provided separate findings for Victoria and NSW/ACT and about half the respondents in each category have a mortgage.
Even with the majority of respondents believing that banks will raise interest rates before June – with the most anticipated rate rise in this timeframe being a 0.25 to 0.5 per cent rise, although around 10 per cent of respondents think they might rise as high as 1.5 per cent – about one third of respondents are still hoping to buy a property in the next two years. Of these respondents, around 35 per cent will be buying an investment property, 30 per cent will be purchasing their first home, and 34 per cent will be relocating – that is, purchasing their next home. And we’re still a renovation nation – around a third of respondents are planning to renovate their existing property in the next 12 months.
Advertisement: Story continues below More than half the respondents in both Victoria and NSW/ACT believe property prices will increase in Australia over the next 12 months, and just under a third believe prices will remain stable. In regards to the ongoing debate that claims house prices are unaffordable in Australia, about 50 per cent of respondents believe the argument is ‘about right’ while around 30 per cent think it is ‘underrated’ (that is, that housing is even more unaffordable than is being debated), while 12 per cent believe the argument is ‘overrated’.
So why are we all so excited about property? The number one reason given by 50 per cent of respondents was “I want to set myself up financially for the future”. The second reason is that we trust property investments more than the sharemarket – with this view accounting for 28 per cent in NSW/ACT and 34.8 per cent of Victorian respondents. Trailing close behind was the reason that “I want to or need to relocate” – giving us a reminder that property is not only a financial investment, but a very practical (and fundamental) part of our lives. Other popular reasons given were “I want to get my foot in the property market door”, “rising rents make purchasing property more attractive” and “tax benefits”.
With the desire for property purchases so high, something has got to give and respondents know they will need to make some lifestyle changes. Ninety per cent of those in NSW/ACT and 80 per cent of those in Victoria indicate they will be cutting back on spending to make a property purchase possible. The second largest sacrifice is missing out on an overseas trip (56 per cent in NSW/ACT and 49 per cent in Victoria). It’s not just managing the outflow of cash, but also the inflows, and more than a third of respondents have said their sacrifice will be “remaining in their current job” (presumably this means people are in well-paid jobs they are not enjoying) while 15 per cent of respondents in NSW/ACT and 20 per cent in Victoria have said they will take on an additional job and around 10 per cent in both states have said they’ll change jobs to chase that higher income.
And of course, we have to be realistic in our desires, and many respondents have said they will be purchasing a less expensive property than desired (26.8 per cent in NSW/ACT and 37.3 in Victoria), or purchase in a non-ideal location (26.8 per cent in NSW/ACT and 21.6 per cent in Victoria). Around 10 per cent of respondents said they will move towns or move interstate to a more affordable property market.
Starting a family was also being sacrificed because of the push for property, with 7.3 per cent in NSW/ACT and 13.7 per cent in Victoria saying they were delaying starting a family as their sacrifice for property.
Naturally, people could tick more than one box on this survey, so I do hope there aren’t too many people who have ticked off all four (“taking on an additional job”, “putting off starting a family” and “purchase a less expensive property than desired” and “purchase in a non-ideal location”).
All this aside, the biggest concern across all respondents (remembering only half have a mortgage right now, but a large proportion are eyeing off property soon) is the rising cost of living for items such as utility bills and clothing, with about 28 per cent revealing this to be the greatest concern, but only half of those worried about rising interest rates.
How about you – what are you most worried about in 2011: higher bills or higher interest rates? And if you’re eyeing off property what’s the suite of sacrifices you’re willing to make?