Global financial what? Housing confidence at three year high


The MFAA, Mortgage and Finance Association of AustraliaA survey has found the Global Financial Crisis is a distant memory for most Australians, who now believe the housing market is set to take off – again.

“A surprising 73% of respondents expect house prices to rise, which is the highest proportion for more than three years,” said Phil Naylor, CEO, Mortgage and Finance Association of Australia (MFAA).

The MFAA/Bankwest Home Finance Index canvassed the opinion of 850 people on a range of issues relating to the economy and housing market.

“Confidence in the housing market is not only pre-GFC – it’s back where it was during the height of the housing boom,” Mr Naylor said.

“But there are still some clouds on the horizon, with recent interest rate increases negatively impacting households,” Mr Naylor said.

Mr Naylor said that 15.9% of respondents are struggling to meet repayments – which is up from only 11.7% in May 2009.

The survey found it was in the former boom state of Western Australia that most respondents claimed to be struggling in their repayments (25%). The least number of people struggling to meet repayments were in NSW (20.6%).

Head of Mortgages at Bankwest, Dean Gillespie, said the survey revealed a reversal of fortunes in WA and NSW.

“The survey suggests that Australia’s two-speed housing market is alive and well,” Mr Gillespie said.

“It would appear that when it comes to the housing market and perceptions of economic conditions, NSW is leading the charge for the first time in years.

Mr Gillespie said that respondents were divided about whether it is a good time to buy a new home, with 49.7% thinking it is a good time.

“Respondents from Queensland (41.4%) were the least likely to think now was a good time to buy, but South Australians were more optimistic with 63.6% saying it was a good time to buy.

Mr Gillespie said that when it comes to other cost of living pressures, borrowers said the cost of food was of greatest concern.

“Over the last year there has been a reversal in burden of fuel versus fuel costs. People are saying that food prices are now taking a bigger bite out of the family budget,” Mr Gillespie concluded.

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  1. Interest rates increasing slowly and tipped to keep increasing for a little while yet. Assessment rates increasing. Stimulus winding back. LVR’s falling. Criteria getting tighter. Valuers being conservative still. Banks curtailing lending this year due to the new G20 tier 1 capital requirements, and Govt Guarantees probably being wound back at some stage. Securitisation market recovering slowly, but funding is still expensive and not available on tap. Where’s the money going to come from to pay for a 2010 boom?

    Sure, there’s a shortage of property and developers dont have much coming online anytime soon. Sure, rental yields are probably going to get pretty attractive too. No argument there, but you still need to get the money and its hard to see where the surge is going to come from because I don’t think banks will have a huge appetite for higher LVR investment loans.. Unless there are a huge number of investors with loads of equity waiting in the wings, hard to see.


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