Regulatory pressures dampen property investor sentiment

There’s proof that increasing regulatory pressures and the tightening of the banks’ lending criteria are affecting the sentiment of residential property investors.

The OpenAgent Consumer Sentiment Index, based on the responses of over 5,000 property vendors, shows that sentiment among property investors has swung quite dramatically over the past six months. It started the year at a low point of +2.2 in January. Its index value then peaked at +3.9 in April, before abruptly reversing course and falling to +3.1 in May, and then slumping further to +2.7 in June.

In contrast, owner-occupiers were more optimistic and more consistent in their expectations of property prices over the past six months. Starting at a high of +5.5 in January, the owner-occupier sentiment index value slowed to +4.7 in April and again to +4.0 in May, before rising slightly to +4.2 in June.

Marta Higuera/ Zoe Pointon, co-founder and co-CEO of OpenAgent, Australia’s largest real estate comparison and referral platform, believes that the volatility in investor sentiment shows that recent talk about a housing bubble and actions taken by the regulators are having an impact.

“In March, the Australian Prudential Regulation Authority told all the banks it expected them to tighten their lending practices, particularly on interest-only and investor loans. And most have been doing this. Foreign investors also received some bad news in the May Federal Budget. They will, for example, incur an annual charge of at least $5,000 for a property which is not occupied or genuinely available on the rental market for at least six months of the year.”


Overall, property owners across Australia, including investors, started 2017 Q2 relatively enthusiastically with an index reading of +4.4 in April, but this had slid to +3.7 by June.

Out of all capital cities, Melbourne sellers are the most optimistic, enjoying the highest sentiment of +5.6 at the end of Q2 – down 0.5 points from Q1.>

Sydney confidence, however, slumped a whopping 1.3 points from a bubbly reading of +6.6 in Q1 to end Q2 at +5.3.

Brisbane and Adelaide ended Q2 with index values of +4.2 and +3.4 respectively. Perth is well behind the rest, just into negative index territory at -0.1. This, however, is a strong improvement for Perth from the clear negative 2017 Q1 reading of -1.9.

The OpenAgent Consumer Sentiment Index Q2 report also contains interesting findings on state, metro and regional consumer sentiment, why people are selling and what they see as the key factors driving their local market. To find out more click here

About the OpenAgent Consumer Sentiment Index

OpenAgent is Australia’s largest real estate comparison and referral platform. Every month, we speak to thousands of homeowners looking for the right person to sell their largest financial asset.

We’re always looking for ways to add value for our customers and realised that by speaking with such a broad range of homeowners all over Australia, we had the unique ability to capture the market perspectives of one of the most important groups in the real estate ecosystem: home sellers.

In November 2016, we began compiling anonymised data capturing the sentiment and market expectations of consumers who were actively looking to sell their property.

In April 2017, we released the inaugural OpenAgent Consumer Sentiment Report, an ongoing quarterly publication that will track the market expectations of active vendors over time. This second release of the report in July 2017 shows some fascinating developing trends in sentiment, based on a total of over 5,000 responses across eight months.

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