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AU It's a good time to buy, you just need to look on the bright side

Property Here - Wednesday, July 31, 2013

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CONFLICTING reports do little to boost much-needed confidence levels in Australia's residential property market.

Sometimes, further examination can provide a different and more encouraging perspective.

The Westpac-Melbourne Institute has reported a drop in its 'good time to buy a dwelling' index.

The institute surveyed 1200 respondents in July and found an 8 per cent drop in those who think that now is a good time to buy a residential property.

The survey results were covered in a number of property forums but what seemed to get lost within much of the coverage was that the 'time to buy a dwelling' index remains at elevated levels overall.

The reality is that consumer sentiment about the property market has been rising steadily since the end of 2011 and an analysis of the current survey results confirms that about 93 per cent of those surveyed believe this is a good time to buy residential property.

What did fall was confidence in family finances - down 6 per cent - however, the Household Financial Conditions report showed that the majority of Australians are in a steady financial position as they reach the halfway point of the year.

The survey, taken last month, shows that 82 per cent of households indicate they are in a stable financial position, with 44 per cent able to save.

NAB also released the results of its quarterly residential property survey of 300 participants - mostly property owners, developers and real estate agents.

NAB reported weaker expectations about house price growth and a 20 point drop in sentiment which almost wiped out the 27 point gain from the previous quarter.

NAB think that prices will rise by just 9 per cent on average over the next three years for all the capital cities combined.

And if their barometer is correct, Sydney will see a 12 per cent rise in house prices over the next three years (this is total, not per year); Brisbane 10 per cent; Perth 15 per cent; and Melbourne 4 per cent.

These figures differ in some ways to those reported recently by economic forecaster BIS Shrapnel. In fact, both sets of forecasts fly in the face of improved affordability and lower interest rates.

BIS think that Sydney's average values will lift by 19 per cent; Brisbane's by 17 per cent and Perth's by 15 per cent. They expect Melbourne to see an increase of just 5 per cent over that three-year period.

We fall more in the BIS camp. The underpinning proposition here is that overall, Australia's property fundamentals have remained strong.

It appears, though, that right now, business is all but asleep with forward plans parked until there is a clear direction ahead politically.

And it seems that consumers are thinking and doing likewise. Australians may remain hesitant about buying property until it becomes more obvious that residential property is on the improve.

What's needed, in our opinion, is a circuit breaker to lift confidence. And once that happens, the rush for residential property should begin.

Hopefully, a federal election, sooner rather than later, will help to kickstart the economy and turn that property confidence switch back on.

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