First home buyers are looking far and wide for a COVID-19 bargain, with some going as far as to look in country towns, ME Bank's latest Quarterly Property Sentiment Report has found.
The report, conducted for the June quarter 2020, found that two-thirds (60%) of young first home buyers were more likely to consider buying in regional areas because of the pandemic to save money and improve their lifestyle, compared with 45% of respondents overall.
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ME General Manager Home Loans Andrew Bartolo said COVID-19 work from home arrangements have made Australians re-evaluate what they want in a property.
“New remote and flexible working arrangements brought in to accommodate for COVID-19 have clearly influenced Australians’ sentiment towards buying in regional areas," Mr Bartolo said.
"It’s now a more feasible option for many and if prices are lower in those areas and you think it will improve your lifestyle – of course it’s an attractive possibility.
“I think many Australians dream about moving to a regional area at some stage during their life, so it will be interesting to see how many do actually decide to pursue a sea or tree change, perhaps earlier than expected.”
A whopping 82% of first home buyers hoped to see more bargain properties pop up for sale if the economy worsens, compared with 66% of investors and 57% owner-occupiers.
The same report also found that just over half (51%) of first home buyers said they plan to get onto the property ladder within the next 12 months, while millennials were the most positive about the current property market than any other age group.
Mr Bartolo said the COVID-19 pandemic has created an opportunity for first home buyers.
“First home buyers may be looking to find a silver lining in the current economic climate, thanks to greater potential for property price falls, record low interest rates and government support," Mr Bartolo said.
"Of course, this will be more realistic for those whose employment and income haven’t been affected as a result of the pandemic.”
In terms of government support, the $25k HomeBuilder scheme appears to be sparking the most first home buyer interest.
Over half (52%) of first home buyers said they were interested in applying for HomeBuilder grants, compared with 33% of existing home buyers.
“With strong interest from first home buyers as seen in the report, hopefully the HomeBuilder grant will help more younger Australians get their foot in the door and increase buying activity in the wider market as a result,” Mr Bartolo said.
Overall, 58% of respondents said they thought the HomeBuilder scheme would significantly increase activity in the property market.
Australians feeling more optimistic about the property market
The report found that Australians are starting to feel more optimistic about the property market following the initial wave of COVID-19.
Positive sentiment rose to 35% for Q3 2020, up six points from 29% in the previous quarter.
Concerns about how COVID-19 would impact property prices also eased off slightly, down 9% since last quarter to 55%.
But when asked about their property plans over the next 12 months, the majority of Australians (61%) are still planning to hold steady and neither buy nor sell.
Only 10% said they had plans to sell.
Mr Bartolo said it's unclear if this renewed optimism will last, especially given the second wave of cases in Victoria.
“The global pandemic continues to shift consumer sentiment and create volatility in the Australian property market, a situation no one would have expected at the beginning of the year," he said.
"The impact of COVID-19 negatively shifted consumer sentiment towards the property market in the second quarter of the year, but we started to see signs of optimism in June.
“Hopefully this renewed positivity and growing confidence is able to weather possible second waves of COVID-19 cases as we’ve seen in Victoria, which is no doubt increasing worry across the nation.”
This survey was conducted for Q3 2020 in June when COVID-19 restrictions initially eased across most states and territories, before the second wave of cases in Victoria emerged.
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