Australian property markets are turning around. Borrowers are feeling better about new loan rules and most Aussies are not at all concerned that house prices have been falling anyway. These are just some of the positive property market messages to come out of the latest Quarterly Property Sentiment Report released yesterday from ME Bank. Public sentiment about property prices for the second half of 2019 is significantly stronger in NSW, Victoria and Queensland than other states but still many people are content to wait and see what happens. While one group of Aussies is rushing in to grab property bargains. Are Sydney prices still falling? The Sydney property market is the most expensive residential market in Australia and often sets trends for the nation. Median residential property prices in Sydney have fallen about 11 per cent since their peak in 2017. In April, leading property forecasters, like Moody’s Analytics were predicting 7.7 per cent house price falls (national capital city average) throughout 2019 before bottoming in 2020. Now property market sentiment in Sydney is improving, auction clearance rates are up and many leading property market economists have called the turnaround. Sydney prices edged up 0.1 per cent last month according to CoreLogic’s June Home Value Index, for the first time since 2017. CoreLogic says median Sydney prices have fallen 9.9 per cent in the last 12 months. ABC Radio reports that the Reserve Bank’s positive outlook on property is supported by SQM Research, Domain, CoreLogic, AMP Capital, BIS Oxford Economics and ANZ. The Reserve Bank reported that conditions in the established housing markets of Sydney and Melbourne “improved a little” in June 2019. “Housing prices had stabilised in June in these cities and auction clearance rates had picked up further,” read the RBA Board minutes released last week, “albeit still on low volumes.” Are Melbourne prices still falling? The Melbourne property market is dominated by auctions with apartments a significant part of the outlook in the Victorian capital. Median residential property prices in Melbourne have fallen about 14 per cent since their peak in 2017. In April, Moody’s Analytics were predicting further price falls in Australia averaging 7.7 per cent before bottoming in 2020. Melbourne was expected to lead the continuing property price malaise, with houses falling more than 11 per cent in value. Those gloomy predictions appear too conservative just three months later. Auction clearances are improving, although on subdued volumes. CoreLogic reports that Melbourne median prices rose 0.2 per cent in June 2019. Melbourne prices are still down 9.2 per cent over the last 12 months, according to CoreLogic. Are property prices going to keep falling? ME Bank reports that Aussies in all major Australian capital cities have an improving outlook on house prices but significantly more people in NSW, VIC and QLD are predicting prices to turn around and start heading up again. House prices in Australia feel in June by an average of 0.2 percentage points according to CoreLogic's June home value index. Capital city prices fell 0.1 per cent and regional markets lost 0.4 per cent. Seventeen per cent of Aussies expect prices to keep falling, down from 28 per cent in April. 30 per cent expect them to stay the same, says ME Bank. “The housing market has seen a moderation in the rate of house price decline … over the last 3 months,” said Craig Ralston from ME Bank “Positivity among sellers and owner-occupiers suggests these groups see the recent market trends as a sign their homes are retaining or regaining value. What do home-buyers worry about? Home buyers and home loan borrowers are feeling better about new loan rules and most Aussies are not concerned about falling house prices at all. That’s according to the latest Quarterly Property Sentiment Report released yesterday from ME Bank. But people in the property market (and those considering entering the property market) still have plenty of worries according to the ME research. An overwhelming number of Aussies (93 per cent) agree that despite price falls housing affordability is still a big issue. That’s up from 88 per cent three months ago. “House prices remain high by historical and international standards,” said ME Bank’s Craig Ralston, “Hence perceived worries about affordability may take time to shift.” All other common concerns shared by many home-buyers and home loan borrowers seem to be easing. The number of Aussies concerned about tighter credit policies has declined 10 per cent, not surprisingly because loan serviceability guidelines have eased and buffer rates lowered. Other worries that relate to falling prices have also subsided, like concerns over negative equity (down 7 per cent) and falling property values (down 5 per cent). “Reduced concern is likely connected to the increased sense of optimism about house prices,” said Craig Ralston. The truth about falling property prices Property prices is a common subject of conversation in Australia. In 2018 and 2019 residential property prices have been falling, triggering concerns about negative equity and declining household wealth. Property prices in the leading Australian markets of Sydney and Melbourne have declined by 11 and 14 per cent respectively since 2017. However, the truth about property prices in Australia is that, despite the panicked headlines and breathless media commentary, Aussies are not really worried at all about falling prices. 61 per cent of Australians in the property market (buying or selling) said they were happy property prices are falling, according to the latest data from ME Bank’s Quarterly Property Market Sentiment Report. And that number has risen over the last three months from 59 per cent, indicating that increasingly Aussies are happy with the direction of house prices in their city. Not surprisingly, 86 per cent of first home buyers feel positive about falling house prices in Australia. Who are the Aussies snapping up property bargains? Australian residential property prices have fallen over 2018 and 2019, particularly in the major capital city markets of Sydney, Melbourne and Brisbane. That has dented the confidence of some buyers, according to the latest Quarterly Property Sentiment Report from ME Bank, released yesterday. More people are “sitting on the fence” and not planning to enter the property market, either as buyers or sellers. While confidence is returning to some markets, notably those in NSW, Victoria and Queensland says the report, the numbers of intending sellers, across the nation, is down 3 per cent, intending sellers is down 1 per cent and 5 per cent more people just intend to do nothing. “There are more fence sitters who appear to be taking a ‘wait and see’ approach to the market,” said Craig Ralston from ME Bank, “Which is not surprising considering the recent economic and political changes.” But some Australians are rushing in and hunting for bargains. A whopping 45 per cent of higher income earners (over $125,000) are intending buyers. The number of 25-39 year-olds intending to buy has declined in three months from 52 per cent to 44 per cent. 44 per cent of intending property buyers are investors, 42 per cent are first home buyers and 24 per cent are owner-occupiers according to ME Bank. Overall, 41 per cent of Aussies feel neutral about the property market, 33 per cent feel positive and 26 per cent negative.