Property owners brace for fall in house prices

Almost 60% of home owners expect the value of their homes to fall in the next three months, according to a new survey from the Mortgage and Finance Association of Australia and BankWest.

Almost 60% of home owners expect the value of their homes to fall in the next three months, according to a new survey from the Mortgage and Finance Association of Australia and BankWest.

The survey of more than 700 homeowners also found that almost of quarter of respondents believed the price of their home had fallen in the last six months.

Pessimism was highest in Western Australia, where almost 70% of respondents expect their home will fall in price in the March quarter and 53.3% believe their house lost value in the last six months.

Victoria was the second most pessimistic state, with 63% of respondents expecting a fall, followed by NSW with 58 .9% and Queensland with 54.5%. South Australians remain relatively upbeat, with just 7% of respondents saying their home had lost value in the last six months.

The chief executive of the MFAA, Phil Naylor, says the result is the most pessimistic since the survey began in June 2006.

But he remains hopeful that the subdued market could convince bargain hunters – and particularly first home buyers – back into the market.

“The expected decline in prices will help address the chronic problem of housing being unaffordable for a lot of Australians, and first time buyers are likely to be enticed back into the market,” he says.

“This may drive a revival in the housing industry in the near future.”

There are already tentative signs that first home buyers are getting more interested, thanks in no small part to plunging interest rates and the expanded first home owners grant – the survey showed 50.5% of potential first time buyers and 45.8% of all respondents believe this is a good time to buy.

The survey has also suggested that households may not be doing it as tough as many believe, with 76% of mortgagees reporting they are “easily” meeting their mortgage repayments.

On top of this, the proportion of respondents likely to borrow actually increased from 15.6% in April 2008 to just over 18%.

“This survey has produced a lot of key markers that would indicate that the financial situation of the average Australian is not as dire as is being portrayed or is generally understood,” Naylor says.

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