National homebuyer confidence may have hit a post-GFC high, but eight in 10 consumers are concerned the Australian property market is overheated.
These are the findings of The Genworth Homebuyer Confidence Index, released yesterday. According to the 11th edition of the report, the Homebuyer Confidence Index increased slightly from 99.2 in March 2015 to 99.6 in September 2015 – its third consecutive increase since March 2014.
This increase was mainly driven by the proportion of all respondents who use over 50% of their income to service debts falling from 29% in March 2015 to 23% in September 2015, a result of the Reserve Bank of Australia’s decision to cut the cash rate to 2% in May.
However, Genworth’s chief commercial officer Bridget Sakr explains that while confidence has hit its highest levels since the GFC, consumers are still concerned about property bubbles.
“Whilst the HCI has reached a post-GFC high, those that believe it is a good time to buy a home has fallen to 48%, from 52% six months ago. This was mirrored by those that thought it was a good time to invest in property which also fell from 47% to 44% in the same period.”
In fact, the index revealed that more than eight in 10 consumers (81%) believe property in Australia is overvalued.
This is true across all states, with those from New South Wales the most likely to believe so (87%) while South Australians the least likely (72%). Further, more than half (56%) of homeowners and almost two thirds (62%) of non-property owners expect prices will continue to increase, despite already showing bubble-like characteristics.
As a result, the index indicates that accessibility (the ability to enter the property market), as opposed to affordability (the ability to meet mortgage repayments), remains the key challenge for those wishing to enter the property market.
“Two in five prospective first homebuyers indicated that high property prices are the greatest barrier to home ownership, while one in five suggested the barrier is saving for a deposit,” Sakr said.