Major bank reports lift in home buyer confidence

The latest Westpac Home Ownership Report has revealed improved levels of confidence among prospective home buyers, with 44 per cent of Australians indicating plans to buy a new home over the next five years.

According to the major bank, this is an increase of 9 per cent since July 2023, with additional increases in those planning to buy an investment at 6 per cent, those planning to upsize (4 per cent), and those planning to renovate (4 per cent).

However, the research discovered a different trend among first home buyers (FHBs), recording a drop of 3 per cent in Australians planning to achieve home ownership over the next five years.

This was coupled with 86 per cent stating the recent cost-of-living challenges have hampered their home buying intentions.

The research, commissioned by Westpac, was conducted by Lonergan Research that surveyed 2,015 Australians aged 18 and over throughout both city and regional areas between 4 and 15 January 2024.

Westpac has reported that home owners are “getting creative” and are willing to make compromises in order to achieve their home ownership aspirations.

Over half of respondents (56 per cent) said they plan on buying their home with a partner, an increase of 16 per cent on June 2021, 75 per cent said they were willing to buy in a location they had not previously considered (up 9 per cent), and 50 per cent are considering “rent-vesting”.

Furthermore, 47 per cent of respondents said they were open to pay for lenders mortgage insurance (LMI) to enter their first home sooner, while 65 per cent have made spending cuts on expenses such as food delivery to help save for a deposit.

These findings came as CoreLogic’s head of research Tim Lawless previously flagged early indicators of housing confidence on the back of the most recent Home Value Index (HVI) data.

Damien MacRae, Westpac managing director of mortgages, commented that Australians are “sharpening their focus on long-term goals”.

“While some buyers have paused their housing plans, the intention to buy remains strong and prospective buyers are becoming more ruthless with their goals,” MacRae said.

“They understand it’s a big task, but they are determined to break into the market and are willing to compromise to get there.”

Buying a house was still the preferred property for respondents, albeit a decrease of 5 per cent, and preferences towards apartments or units have increased by 7 per cent since 2021.

Meanwhile, preferences for town houses have doubled since June 2021 and house and land package preferences have quadrupled, according to Westpac.

MacRae added that more buyers sought out property away from metropolitan areas during the COVID-19 pandemic, but have now conceded on location to “get a foot in the door”.

“While it’s promising to see buyer confidence returning with growth in medium to long-term plans, this underscores the importance of addressing the challenge around supply shortages,” he said.

“We welcome Federal and State Government initiatives which seek to address this, and now need businesses and government at all levels to progress with implementing these policies at pace.”

[RELATED: Tim Lawless flags early indicators of housing confidence]