Australian house prices predicted to drop as property investment falls out of favour

The world has undergone so much upheaval since Switzer Financial Group’s first Switzer Fear, Greed & Hope survey, initiated in February 2020. Our second survey in May 2020 sought to uncover how investors’ attitudes toward markets and the economy had changed in just three months. We found that:
 

  • 54% of respondents believe prices will drop in the next 12 months, compared to 4.7% just three months ago.

  • In February 2020, 65.9% of respondents thought property prices would increase over the next 12 months. Now, just 9.2% are predicting a rise.

  • Property is no longer one of the top investment options for Australians. 10.5% would invest in property right now, compared to 62.7% in shares, 10.1% in term deposits and 16.4% in “other”.

Director of Switzer Financial Group and respected financial commentator, Peter Switzer said: “In February 5% of Aussies thought house prices would fall and 66% expected prices to rise but in three months more than one in two think prices will fall! That’s an astounding turnaround.”

Ahead of the Reserve Bank’s record-breaking interest rate cuts, which still sit at 0.25 per cent from March 2020, 68.2% of Australians predicted interest rates would drop. Now, Australians are more torn, with 56.1% anticipating interest rates to move higher and 43.8% predicting another drop.
 
In regard to COVID-19 lockdowns, 64.3% of our respondents believe lockdowns were lifted at the right time, while 17.8% equally believe restrictions were lifted too early or too late.
 
Survey insights
 

Our survey results provide rare insight into a statistical understanding of:
 

  • How quickly the market can change.

  • The volatility of market opinions.

  • What areas remain a constant throughout a period of global hysteria.

“The big surprise here is that, after the coronavirus, more Australians feel comfortable investing in stocks over property,” said Peter Switzer.

 
The Fear, Greed & Hope Survey is a quarterly survey released by Switzer Financial Group, which launched in February 2020. Over 2500 respondents participated in our February survey and almost 3000 respondents participated in our May survey.
 
Our demographic predominantly reflects the investing strategies of middle to mature aged investors, who are either full-time workers or retirees. The majority of our database prefer to invest in stocks.

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