Survey reveals lengths buyers will go to, to purchase property in 2010

A recent national survey of 1100 users, conducted by www.realestateVIEW.com.au aimed to gather data on potential home buyers in 2010 and their feeling about the year ahead, as well as the sacrifices they would be willing to make to purchase a property.

While rising interest rates and house prices are concerns echoed by many home buyers, people still seem to be optimistic about successfully purchasing a home in 2010, although it may not be exactly what they had in mind when they originally started their property search.

How market demand and price increases are changing buyer decisions

With the market showing record growth over the 4th quarter of 2009, there was no surprise that buyers were reviewing their budget to buy in 2010.   In fact a whopping 2 out of 3 people expected to have to increase their budget in order to find a suitable property in a suitable location in 2010, with 72% of these individuals expecting to raise their original budget by over $20,000.  Showing that potential buyers are at least prepared for what the year ahead may bring.

However it seems that increasing their budget is not the only consideration buyers are making.  When asked about what compromises buyers are making it seems many of them are considering other alternatives to their find a suitable home.  62% of those surveyed thought they may need to look ‘further out’ than they originally planned, whilst 55% of people would look for a property of smaller size and 51% would look for a home of lower quality than originally planned.

So while prices are still rising it seems potential buyers out there are prepared to make some sacrifices to get onto the property ladder.

Overall market data such as that provided by propertydata.com.au seems to point to the fact that the prime inner suburban properties will continue to be snapped up, but more humble buyers as shown from the realestateVIEW.com.au survey are willing to move ‘out’ to find something that suits.  They may not be getting a house that is as nice as they originally planned or the house as large as they might first have thought, but they know that there are ways to make this work.  It seems that demand may not slow; it may just change a little.

realestateview.com.au, survey

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About Petra Sprekos

Operating within the real estate industry since 2000, Petra

13 Responses to Survey reveals lengths buyers will go to, to purchase property in 2010

  1. Chris Wilkins April 22, 2010 at 4:32 am #

    Hi Petra

    just read your article really interesting
    if i can be of any help anytime with your research please dont hesitate to contact me

    R,

    Chris

  2. Kylie Emans April 22, 2010 at 4:55 am #

    I have the perfect example of the lengths buyers are going to try and secure a property in the current market. My sister was going to buy in Dec 09 but was also getting married that month so held off after doing all the groundwork and research for 3 months prior. In earnest her and hubbie headed out to their first auction on 14th Feb to buy a barely livable tiny semi in Newtown, agent quoting high $500,000’s, their budget $650,000. It sold $655,000, only $5,000 over their budget but more than the renovated semi in same street sold for in Dec. Last night, their 3rd attempt and with budget of $680,000 now (new bank, new loan) they missed out when the property that only sold for $565,000 in Nov 2009, with no work done sold for $765,000 6 months later, (who makes $200,000 in 6 months!). How will people be able to keep up with this. Normal people can not keep up with the current market, our incomes are not increasing at the same pace and interest rates are consistently going up. We are in for some interesting times.

  3. Robert Simeon April 22, 2010 at 5:28 am #

    Interesting Kylie – I met for an hour this week with arguably Australia’s most successful merchant banker (who shall remain anon) and he told me that we can over the next 12 months expect interest rates well over 10 per cent, double digit inflation, Aussie dollar at $0.60 (or thereabouts) and China to have a massive implosion. Greece will drown in debt and all the countries have huge borrowings that require paying back so there won’t be any monies for new stimulus packages.

    Whilst shocked – I can see why once it was explained. Debt sometimes can have a reverse effect as we found out in the early nineties. Now if that happens and we all hope that it won’t the businesses with the strong online content will do very well as there won’t be any newspaper advertising and the entire market will go online.

  4. Andrew Blaxland April 22, 2010 at 5:56 am #

    Bring it on. The sooner we go totally online the better. 95% of vendor funded advertising is still being put into print which in reality is only bringing in 20% (at best) of the buyer enquiry. I had a property open for inspection last Saturday and had 9 buyers through. I went to the trouble of asking each buyer where they had seen the property advertised…. not one saw the print ad. We always have trouble with paradigm shifts don’t we.

  5. Greg Vincent April 22, 2010 at 6:19 am #

    Robert our economy has literally defied gravity. Once again we hear of the overseas investors buying property & leaving them vacant like they did on the Gold Coast back in the 80’s.

    This only helps to exacerbate the housing shortage and puts upward pressure on house prices and upward pressure on interest rates.

    10+ per cent interest rates will cripple a lot of the buyers who jumped in 6 months ago. They’ve already experience 5 rate hikes out of the last 6 meetings of the RBA.

  6. Kylie Emans April 22, 2010 at 6:25 am #

    Robert, I believe it, I have just got back from Japan and they have been in recession for 10 yrs or more and they can’t believe how our real estate market has jumped back so quickly after the global financial crisis and now we have this mess that the volcano has created and I don’t think people have realised the flow on effect of that either. People seem to have very short term memories, another rate rise in May for sure.

  7. Robert Simeon April 22, 2010 at 6:40 am #

    Rates up again definitely at the next RBA meeting and for those who may think that it was a liquid lunch – it was a meeting and we consumed mineral water and green herbal tea. You can well imagine my reaction when told – I hope that these predictions do not come to fruition – however he did say that bankers have learnt nothing from the GFC!.

    Many predicted some time ago that there was a strong possibility of a double dip and some believe that it has now become a strong reality. get your SEO up guys because it appears that the goal posts may soon be moved again.

  8. PaulD April 22, 2010 at 8:26 am #

    Regarding interest rate rises.
    I have not yet heard one compelling argument as to how raising residential housing interest rates helps the economy. I have listened to the economic Gurus particularly from esteemed organisations like BT (read Westpac) and NO ONE has a credible argument. The particular commentator had the temerity to refer to the interest rate rises in 2004 and said something to the effect “that at least the rates won’t go up 2.5% in two months. Well Mr Caton, perhaps you need to use a calculator because : follow me if you can, a 2.5% interest rate rise on an 8% rate is 31.25% – are you with me so far ???? If we get a 0.25% interest rate rise in May which will take the prime rate to 4.5% – now follow closely —– That is a 1.5% rise on a 3% base rate — and guess what — that is a 50% increase in 7 months – give me a 31% increase any day. Does this man REALLY think everyone is that stupid ?????? He went on to say that the reason there needs to be interest rate rises is due to the booming resources area in the Australian economy and that inflation had to be kept under control. Well, Mr Stevens – get them to pay for it. The only thing that increasing interest rates will do is crush the economy. Already we are noticing an increase in mortgagee sales (three in the last month – previously 3 in the last 3 years) Rents WILL go up, unemployment WILL increase, production WILL slow down, the domestic retailers are already suffering and WILL suffer further — and guess what, the Banks WILL continue to turn in RECORD profits. Interest rate rises are just a more palatable form of Taxation. Imagine a Government jacking taxes up to cover it’s shortcomings – they would lose government. Interest rates are just accepted by the masses as a necessary evil. The Governor of the RB (Mr Stevens) keeps saying that rates have to go up because they are “Below the long term average” Is that a good enough reason ?? Give us an economic analysis – don’t just say because they are below the long term average. And if that IS the way this countries interest rates are set, then we really are in trouble.

  9. PaulD April 22, 2010 at 12:00 pm #

    Correction – I meant 1994 not 2004 – that’s 16 years ago. Everything has changed in that time. It is a useless comparison.

  10. Glenn Batten April 22, 2010 at 9:39 pm #

    Scary stuff…but you would have to think if Australia falls back to that position then there are going to be many other countries in a worse position.

  11. PaulD April 23, 2010 at 1:40 am #

    Glenn, I saw, somewhere last week where Mortgage interest rates in the US had just hit 3.6%, and the way the article read, that was big news. The headline was “Mortgage Rates Hit 3.6%” Our Interest rates are in some cases already over 7%. My point here is – that if we are such a great manager of our own economy, and we are SO much better off than the US and confidence is returning – How come our residential interest rates are already DOUBLE theirs and likely to go higher ???

    I previously said that 1994 was a useless comparison, but lets have a look anyway, because Ian Gordon(I think that’s his name), the CEO or GM or whatever with HMI mentioned the 1994 thing as well. The Economists all tend to want to hang their hats on 1994 and say ” Things are better this time !”

    The Inflation rate in 1994 was similar to now, only the resources boom had not yet happened. The average weekly wage in 1994 was $700, it is now $1226 that’s a 3.5% annual growth in that time. The median price for a home ( I’ll use Sydney) was $205K in 1994 – it was 595K in Dec2009, that is a 6.95% annual growth. So in other words the median house price has gone up at nearly double the rate of the increase in the average weekly wage. Housing affordability is now worse than it has ever been, and the Reserve Bank want to put their foot firmly on the throat of the people who are, in most cases, NOT contributing to the (already low) inflation rate, because they have no money left after paying their mortgage.

    And I’m still waiting for someone to give me a credible reason why this interest rate rort is happening !!!!!!!

  12. Kylie Emans April 23, 2010 at 1:48 am #

    The lift interest rate policy when the real estate market is going well is just the easy way for the government to slow down the market, it is slack and not effective. You would have thought that they would have worked that out 2 years ago when they had to do an about flip within months of interest rates reaching 9 plus %. But hey look at the debacle with the governments insulation policy, everyone could see that was going to end in tears!

  13. portugal for sale property August 14, 2010 at 5:57 pm #

    Wow, I didn’t realise that the market had done so well in the last quarter of 2009. In relation to having to look further afield, I beleive this tendency is seen in the majority of cities. In relation to housing affordability, potential buyer’s should be careful of overstretching themselves, we only have to lok at the current financial collapse to understand why.

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