Although the 2010 property market was one of the strongest the industry has seen in recent years, 2011 is already showing signs of the market slowing. With auction clearance rates down year on year across the country and more stock than there are buyers – it seems that the Reserve Bank’s interest rate hikes have had their desired effect on curbing consumer spending and investment.
However is it all doom and gloom in the property market? RealestateVIEW.com.au recently conducted its annual Consumer Buying Sentiment survey to investigate just how are buyers feeling about the market in 2011. Surprisingly despite fewer buyers in the market, it does seem that those intending to buy in 2011 feel that they need to make fewer sacrifices in 2011 than those buying in 2010 – which is the silver lining for the property market.
Stretching the Budget
Invariably most home buyers start with a budget in mind and this changes and evolves as they begin the research process. In 2010 when the market was highly competitive, 66% of consumers felt that they would have to increase their budget to find a suitable property. In 2011 however with more supply than demand consumers are somewhat more hopeful that they will be able to stick to their budget, with only 55.4% claiming they will need to increase their budget to secure a property.
Compromising on the dream
It also seems because the current market is more favourable for buyers that this is providing consumers with more confidence about finding a property that ticks all of the right boxes.
Of those who need to make sacrifices to buy, fewer consumers (10.5%) in 2011 feel they need to look for property in suburbs further away from the city than originally planned. In addition fewer consumers (11.8%) in 2011 feel that they would need to consider properties that are smaller than originally planned, whilst 14.5% fewer consumers in 2011 feel they would need to compromise on quality.
Despite fewer consumers needing to compromise, housing affordability is obviously still playing a role in a consumer’s ability to buy a property that meets all of their criteria. Nearly half of all consumers surveyed still need to compromise on at least one of the above factors when buying a home.
Rising Costs of Living
Although the threat of interest rate rises still loom it seems there is another factor that could impact buyer appetite in 2011 and that is the flood levy. According to the 2011 survey, one fifth of potential buyers felt that the flood levy will impact their ability to buy. With legislation for the flood levy passed it is therefore expected that the flood levy may have a similar impact to an interest rate rise on the market; however only time will tell.
About the survey
Over 800 consumers took part in the annual realestateVIEW.com.au Buyer Sentiment survey in 2011. The 2010 survey was completed by over 900 respondents. The survey contained 24 closed questions and was conducted through surveying buyers on realestateVIEW.com.au. For more information about the survey please contact firstname.lastname@example.org