More Australians think now is a good time to buy a new home than at any point since November 2013.

Successive cuts to interest rates have increased the borrowing power of prospective buyers and reduced the gap between home loan repayments and renting costs.

So much so that even continued job shedding across the country has failed to dent the enthusiasm for buying new homes. Never mind the gradual withdrawal of government support.

The value of new home loans in September was up a massive 25.5 per cent on the same time last year.

And data from CoreLogic shows property prices rose in every capital city except Melbourne the following month – with a separate report finding that roughly two-thirds of Australians (65 per cent) believe prices in their local area will either stay the same or increase over the next year.

The report, released on Thursday, was based on a survey conducted in October by industry super fund-owned bank ME.

Based on a nationally representative survey of 1000 Australians, it found that 38 per cent of Australians were feeling positive about the property market in the fourth quarter of 2020, compared to 29 per cent in the second.

Meanwhile, 20 per cent were feeling negative about the market – down from 27 per cent.

“This is really promising and indicates that despite volatility in the market, Australians have a resilient mindset when it comes to property,” said Andrew Bartolo, ME’s general manager home loans.

The survey also revealed a third of Australians (34 per cent) at the moment are planning to buy property and 12 per cent are planning to sell – which is up from 29 per cent and 10 per cent respectively at the height of the pandemic in the second quarter.

Combined with nationwide price increases and growing demand for home loans, the survey suggests early predictions of a pandemic-induced house price crash are unlikely to materialise.

• CommSec: Australians are once again building the largest houses in the world

Source: ME Bank

Analysts are unsure what will happen to the market when home loan deferrals end in March and there’s no interest from overseas buyers thanks to closed international borders. It could hit a rough patch.

But most economists have nonetheless tempered their worst-case scenarios, with Commonwealth Bank for example forecasting a peak-to-trough fall of no more than 6 per cent and a rapid rebound in the second half of 2021.

The latest Westpac-Melbourne Institute Index of Consumer Sentiment appears to support this view.

Released on Wednesday, the monthly survey revealed the ‘time to buy a dwelling’ index surged 8 per cent from 122.2 to 132.0 – which was 11 per cent higher than a year ago and the highest reading since November 2013.

It was also accompanied by a rise in the ‘House Price Expectations Index’ – meaning more Australians think prices will rise in future.

Westpac chief economist Bill Evans said the first index captures the mood of owner-occupiers, who are sensitive to shifts in affordability, while the second captures the mood of investors, who are focused more on the potential for capital gains.

“In the early stages of a strong market upturn, both indexes will tend to be aligned,” he wrote in a note.

“That is the case in the November survey where the House Price Expectations Index lifted by an impressive 12 per cent to be only 7.3 per cent below its level in March and 5.5 per cent above its long-term average.”

The jump was largest in New South Wales and Victoria – with Mr Evans noting the boost from record low interest rates was “clearly over-riding negatives around high unemployment; the overhang of deferred loans; the prospect of withdrawal of significant fiscal support; slow population growth; and rising vacancy rates”.

Without doubt this survey is signalling a strong resurgence in the housing market,” he said.

And, for the time being, the governor of the Reserve Bank is unconcerned.

“In short,” Mr Evans wrote, “the monetary authorities, who are usually unnerved by booming confidence in the housing market, are supporters of these developments due to the boost that a strong housing market will give to jobs and growth.”

The New Daily is owned by Industry Super Holdings