Home buyers develop a case of the wobbles

Data appears to point to a housing market that has passed its peak, experts believe.
Data appears to point to a housing market that has passed its peak, experts believe.

While housing markets remain strong, buyer confidence is waning.

Comparison site Finder's Property Positivity Index reveals the number of Australians who think now is a good time to purchase real estate has hit a record low.

The indicator peaked last December, when 67 per cent of respondents were upbeat. However October's numbers have dipped to 35 per cent after registering at 40 per cent in September.

Figures compiled by CoreLogic show no sign that house prices are declining, with year-on-year capital city increases of 14-31 per cent, while the median house in Sydney now costs $1.2 million.

However NAB's influential Residential Property Index has dipped to +60 points for the third quarter from a survey high +71 points in Q2.

Its accompanying report suggests cracks are appearing, with data showing price growth and sales easing, building approvals on the slide, and things generally "pointing to a market that has passed its peak".

Finder's head of research Graham Cooke says property price growth had seemed unstoppable, with extended lockdowns and border closures doing little to curb increases this year.

"Rock-bottom interest rates and the property boom instilled a fear of missing out among prospective home buyers," he said.

"But as we emerge from those lockdowns, a record number of Australians are now pessimistic that now is the time to buy."

Shane Oliver of AMP Capital agrees.

"A year ago when prices were still down was a good time to buy but since then affordability has deteriorated," he said.

There has been a notable increase in the number of Australians who feel extremely negative about their ability to afford a home in the future, according to Finder's Consumer Sentiment Tracker.

It reported a high of 22 per cent in June and hasn't dropped below 19 per cent since.

Meanwhile, the average amount of money Australians save each month has fallen to its lowest level since before the pandemic.

After a temporary uptick through July and August, average monthly savings hit $688 in September, the lowest level since March 2020.

Mr Cooke said the dip was likely due to the threat of the pandemic slowly starting to pass.

"Once Australians begin to receive more certainty about the future and with restrictions lifting across parts of the country, we can expect spending to start rising again," he said.

"The Christmas months traditionally see an uptick in consumption.

"If Australians are free to travel and socialise for the first time in months this summer, we can expect spending to surge as people make the most of their freedom."

Australian Associated Press