70% of FHBs say home ownership is 'unrealistic', but overall figures rebound

by AB02 Aug 2013

New figures from an independent survey commissioned by Genworth suggest that homebuyer confidence has rebounded significantly in Australia over the past quarter on the back of improved consumer expectations of mortgage stress.

The Genworth Homebuyer Confidence Index, which measures homeowner sentiment from a sample group of 2,124 mortgage holders, jumped from a record-low of 93.4 in March 2013 to 100.1 at the end of July 2013.

The 7.2% increase saw the Index reach its highest level since it was first calculated in 2007.

“The spike in consumer confidence recorded since March was driven by a 37% decrease in the proportion of surveyed borrowers who expected to experience mortgage stress over the next 12 months,” says Genworth’s chief commercial officer, Bridget Sakr.

“It appears that consumers are becoming more confident about making repayments, with the Index showing that 29% of homeowners expected interest rates to decrease over the next 12 months – compared to 12% who held this expectation in March.”

The 17% of borrowers who did expect to experience mortgage stress in the coming 12 months continued to cite concerns about the cost of living as the main driver.

In March 2013, homeowners’ concerns about servicing their mortgage over the coming year were heightened for recent first homebuyers, with the recent first homebuyer component of the Index plummeting to a record low of 85.9.

However, the July Index showed a rebound in confidence to a record level of 99.9.

The findings suggest that for those looking to enter the property market, housing affordability and saving for a deposit remain the biggest barriers to homeownership.

“Research showed that 80% of non-property owners considered it unrealistic to save a 20% deposit. Also, 34% of prospective first homebuyers believed that affordability may be an impediment to achieving their goal,” says Sakr.

“The latest Genworth Homebuyer Confidence Index suggests that homeowners realise that current market conditions – particularly historically low interest rates – make buying property and servicing a mortgage a more attractive proposition than it’s been for a number of years.

“However, affordability remains a challenge for those yet to enter the market, with 70% of non-property owners believing the dream of homeownership to be unrealistic.”