Latest research has found three out of four Australians believe residential property sellers need to wake up to the reality of lower house prices.
The joint CoreData/NEWS.com.au poll, which involved more than 2,000 people, also suggests this year’s interest rate rises have filtered through and are now impacting on consumer spending habits.
Many of those with spare cash are opting to pay off their outstanding debts rather than consume â€“ potentially placing downward pressure on the economy going forward.
Seventy three per cent of respondents to the survey thought property sellers held unrealistic expectations of where the market was at, while 63 per cent of the 2,065 respondents believe the higher rates will force sellers to accept lower prices for their property.
As a result, expectations about property prices continue to deteriorate. In this survey nearly half of all respondents (48.2 per cent) expect house prices to fall in the next quarter â€“ up from the 33% in February.
The term ‘negative equity’ will become a more commonly referred to term in the media should prices fall in line with expectations.
Already, for the group of homeowner respondents whose property had fallen in value – twenty seven per cent of homeowner respondents noted the value of their property had fallen over the past 12 months – one quarter said their mortgage was now worth more than their home. This equates to 7.8% of all borrowers.
Meanwhile the recent interest rate rises are starting to bite consumers with 30.8% of respondents stating that the combined affect of the last two rate changes has made meeting loan repayments ‘slightly more difficult’, while 14.7% said that it has made repayments ‘much more difficult’.
The rate rises may derail any hopes of a recovery in the residential property market, as 26.3% of respondents stated they were now less likely to purchase residential property – a slight increase from the previous poll’s 23%.
Meanwhile, 41% of people with spare cash are managing their exposure to interest rates by paying off their loans at a faster rate while lower property prices are failing to entice people into the market with just 16.3% of respondents claiming to be more likely to buy an investment or residential property.