Buyer confidence jumps as more homes hit the market across Australia

New research shows that the vast majority of prospective buyers feel positive about getting into the market, despite interest rates remaining at a 12-year high and property prices hitting levels never before seen.

Buyer confidence has increased markedly over the past three months, the latest Mortgage Choice Home Loan Report shows, with 83% of prospective buyers now feeling positive about buying a home compared to 70% last quarter.

Although the latest data shows buyers have more homes to choose from, the report revealed they are still making big compromises to get into the market.

Challenging purchasing conditions, including record-high property prices and high interest rates, are causing buyers to adjust expectations.

Three out of five buyers were planning to purchase in a regional area or further out from the city to get into the market, with education and healthcare workers more likely to leave the city to get on the property ladder.

Recent PropTrack data revealed that home prices have grown most this year in affordable areas, particularly in the outer suburbs of the capitals, reflecting increased demand for lower-priced properties as buyers grapple with reduced borrowing capacities due to higher interest rates.

Separate research shows that the number of city-dwellers moving to regional areas hit a 12-month high. The data shows millennials are leading the charge, empowered by workplace flexibility and facing worsening affordability in the capitals.

High property prices in the cities are forcing more buyers to adjust their search grid and search for a home in the regions, where homes are typically more affordable. Picture: Getty

---

Meanwhile, half of buyers were opting for a smaller house than originally planned, the Mortgage Choice report found.

About a third of buyers were opting for an apartment over a house, while a quarter were settling for a duplex instead of a freestanding home.

The research also found that the search process was dragging out, with 62% of buyers saying it was taking longer than expected and a third needing multiple pre-approvals because theirs had expired before they found a home.

Mortgage Choice CEO Anthony Waldron said high property prices were causing buyers to compromise on what and where they were buying.

“Despite a challenging economic climate and reduced borrowing capacity, in the June quarter the national average loan size continued to remain well above 2023 levels,” he said.

“As a result, buyers are needing to compromise on the location and type of property they plan to buy.”

A large proportion of buyers are adjusting their expectations in the facing of high property prices, but opting for smaller houses, apartments or duplexes. Picture: realestate.com.au/buy

---

However Mr Waldron said buyers were putting aside interest rate uncertainty and basing the timing of their purchases around when it was right for them.

“Buyers are recalibrating their perspective on interest rates and whether there is in fact a ‘right time’ to buy property,” he said.

“After hearing a range of predictions on rate movements, from forecasts that rates would fall multiple times in 2024, to speculation that rates may rise and that cuts won’t come until 2025, buyers are recognising that perhaps the right time to buy is simply when they’re ready.”

The Reserve Bank held the cash rate steady at its board meeting on Tuesday last week, stating that inflation had fallen significantly as a result of higher interest rates but remained too high.

Some of the big banks had predicted interest rate cuts would start coming down later this year, but RBA governor Michele Bullock said a rate cut was “not on the agenda in the near term,” dampening expectations of cuts in 2024.

Choice for buyers improves as new property listings surge

The boost to buyer confidence comes amid an increased number of homes being listed for sale across Australia, improving choice while also contributing to slower growth in home prices, which remain at record levels around most of the country.

New listings volumes in July were 8.4% higher over the month and 12% higher compared to a year ago, according to the PropTrack Listings Report for July.

Every capital city had more new listings in July than the same time last year, with the biggest increases in Adelaide (17.4%), Canberra (16.2%) and Brisbane (16.1%).

New listings were 14.6% higher in Melbourne and 12.3% higher in Sydney, the report found.

Listings volumes have increased steadily in both of Australia’s largest cities, with the total number of listings on the market now 21.7% higher than a year ago in Melbourne, and 17.4% higher in Sydney.

The total number of new listings on the market in Melbourne is up almost 22% compared to to the same time last year. This St Kilda home has just been listed and goes to auction next month. Picture: realestate.com.au/buy

---

PropTrack director of economic research Cameron Kusher said higher volumes of new listings were making things easier for buyers.

“The stronger new listings environment has resulted in more choice for buyers with total properties advertised for sale up 8.3% in July from a year earlier,” he said.

“While the strong volume of new listings and total properties for sale is an indicator of seller confidence, it is also likely a key contributor to slowing home price growth.” 

The latest PropTrack Home Price Index showed that home prices grew in July at the slowest rate since late 2022.

PropTrack senior economist Paul Ryan said the slowdown in growth partly reflected the fact that winter was typically a quieter period in the market, but also coincided with the strong listing environment.