First home buyers expanding their housing options

Interest in property remains high, with a wider variety of property types now being considered by those purchasing their first home, according to QBE's fifth annual report into mortgage and property market sentiment and behaviour, released today.

The 2015 QBE Barometer report, prepared exclusively for QBE by GfK Australia, presents current trends in mortgages and property and Australians' perceptions of the market, tracking year-on-year changes while also considering topical influences on market sentiment.

On launching the report Jenny Boddington, Financial Institutions EGM and CEO of QBE LMI, said: "Building on the sentiment of the last few years, the 2015 Barometer report shows low interest rates are continuing to support Australians' appetite for property."

The 2015 Barometer survey results support housing economic indicators that interest in property remains high, with 14.5% of adult Australians intending to buy property in the next 12 months; almost level with mid-2014 levels (14.8%) and greater than in mid-2013 (13.2%). vWhile property demand has remained strong, so too has First Home Buyers (FHBs) and Mortgagors' interest in buying new developments.

Compared with June 2014, FHBs are more likely to be interested in looking to buy new properties (67%, up from 60%) and First Home Mortgagors are increasingly likely to have bought a new dwelling (41%, up from 35%). "We've also seen an increased openness from FHBs and Owners to purchase a broader range of property types," said Ms Boddington.

In June 2014 FHBs were each open to an average of 1.8 different types of property. At February 2015 it had increased significantly to 2.4, with the trend most noticeable for houses and townhouses.

"This might suggest, as property prices and the perception they are overvalued rise, FHBs are needing to become more flexible in their housing options and are more open in particular to looking at new properties," said Ms Boddington.

Despite this strong appetite however, the report also shows housing affordability continues to be a concern for those intending to purchase real estate in the next five years, with half (47%) believing it will become increasingly unaffordable.

"This concern is likely being fostered by the perception property prices are high and rising," said Ms Boddington. More than half (56%) of respondents think property prices will continue to rise in the next 12 months and only 23% think prices will fall.

Affordability is of particular concern to FHBs. "FHB activity is declining and affordability seems to be a key contributor," said Ms Boddington, with 58% fearing they will never be able to afford their own home and 85% thinking future generations will find it harder to purchase their first home (up from 76% in 2014 Barometer).

According to the report, perceptions in the direction interest rates will shift in 2015 have changed markedly since 2014, with a significant increase in the number of people who believe interest rates will decline in the next 12 months.

In mid-2014 there was an overall expectation they would increase during the rest of the calendar year, with 39% anticipating an increase and only 7% a reduction. By February 2015, however, the expectations of a decline in interest rates equalled those of an increase (29% increase vs. 30% decline).

Looking at the sale of insurance at the time of taking out their mortgage, only 31% of mortgagors recall being offered building or contents insurance by their financial institution.

While 36% of Big 4 bank customers remembered being offered insurance, only 7% of those getting a mortgage through a broker recall an offer being made. In terms of offering any type of insurance, respondents recalled the Big 4 Banks were nearly three times as likely as brokers to offer insurance (56% compared to 19%).

"The Barometer results suggest there is a big opportunity for those mortgage institutions and brokers, who can really articulate and show the value they can add as an insurance distributor, to grow their business at the property purchase point of sale," said Ms Boddington.

About the QBE Barometer

The information, views and opinions in the QBE Barometer – an annual study of the mortgage market in Australia – is based on research performed by GfK Australia and includes quantitative data gathered from Australian respondents during February 2015. An online survey, developed by GfK in consultation with QBE, was conducted from 5 to 16 February 2015, targeting Australian adults who either have a current residential mortgage or intend to buy residential property (as an investment or a home) in the next five years. Data were weighted to the Australian population according to 2013 population data from the Australian Bureau of Statistics. A total of 1,014 responses were collected, with 656 being Mortgagors, 701 being Intenders, and 343 qualifying for both.

For further information please contact:

Megan McDougall
Senior Communications Specialist
QBE Change and Communications
Phone: 02 9375 4664
Email: [email protected]