The vast majority of Melbourne homeowners have rejected expert claims the city’s property prices will fall this year.
A new survey by ME Bank has revealed almost four in five Melbourne homeowners believe their house price won’t dip in 2019.
More than a third believe it will grow, according to the Household Financial Comfort Report.
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The response flies in the face of expert economist and data analysis group predictions prices will tumble anywhere from 3 per cent in the next six months to a double-digit wipe-out by the end of the year.
ME Bank economist Jeff Oughton said confidence drove the property market and homeowners might not have their heads in the sand.
Unemployment was falling, wages were starting to show signs of growth and interest rates could be cut this year, Mr Oughton said.
“When you look at the owner-occupier market there’s virtually no negative equity — those who bought into the market very recently might have a little negative equity,” he said.
“But there’s been no trigger in terms of forcing people to sell.”
While he believed the market had cooled and further reductions this year seemed likely, there was a chance a market U-turn could put owners ahead before the end of the year.
“That downward pressure will turn around at some stage, and I think households might be right about when,” Mr Oughton said.
“I can think of an optimistic scenario where the housing market will have bottomed out and started to rise again in the next year.”
But the head of one of Victoria’s most widespread real estate groups said many homeowners might be falling victim to wishful thinking.
Barry Plant chief executive Mike McCarthy said in many parts of the city sellers had adjusted their price expectations last year and now believed prices had firmed at this lower level.
“For some areas the thinking has been adjusted,” Mr McCarthy said.
“And they would think that the suburb has dropped and won’t drop further.
“But I think a rise is wishful thinking.”
Despite this, there were positive signs with buyer numbers rising for the start of 2019 compared to the end of 2018 — almost tripling in some parts of the city.
The ME Bank report tallied the views of about 300 Melbourne residents in the final days of 2018.
It also revealed housing stress had declined across Australia, with less than half of Aussie households spending more than 30 per cent of their income on a mortgage.
The greater financial comfort was linked to price falls across last year and rising incomes.
More households were also saving money and avoiding overspending.