By Martin North, cross-posted from the Digital Finance Analytics Blog:
Change is afoot, according to the latest findings from our household surveys which looks at property intentions and motivations. The results, (which includes data from as recent as last week), are showing significant changes compared with a couple of months ago, and investors, in particular, are feeling the heat, thanks to rising lending costs, flat rentals, and lower house price rise expectations.
The intent to transact is on the wain, with portfolio and solo investors signalling a fall in expected transactions. In contrast, there is a significant uplift in those seeking to refinance an existing loan (which mirrors recent rises in refinanced loans, and the current attempts by lenders to attract borrowers with attractive deals for owner occupied loans).
House prices expectations are on the turn, with investors, those eternal optimists, now more uncertain about future capital appreciation. Almost all segments are showing a fall in future expected growth compared with a couple of months ago, but investors are in the headlights. Such large changes over just a couple of months is unusual.
There remains significant demand for loans, and those wishing to borrow more…
… but investors are banking on tax breaks to support their investments, as the cost of finance rises, in the context of flat income growth and rentals. Overall investors think there is still a better return to be had than from bank deposit accounts, although as we showed recently, many, in net cash flow terms, will be underwater.
Finally, looking at savings intentions, we see little change, with prospective first time buyers still saving hard, despite low returns from deposits.
In the next few days we will drill further into the detailed segment specific data, but it looks as if the property worm is indeed turning.
