Snapshot of the housing market

• The HCI for homeowners generally, and FHBs in particular, fell in the six months to March 2014.
• This was driven by an increase in the number of homeowners who experienced mortgage stress over the past 12 months, as well as those expecting stress in the coming year.
• One-third of prospective FHBs are still struggling to save a deposit.
• For prospective FHBs though, 71% think the dream of home ownership remains realistic, up from 67% six months earlier.
Cost of living remains the key driver of mortgage stress for homeowners (49% versus 25% for FHBs) while concerns around underemployment is the main driver of mortgage stress for FHBs (63% compared to 32% for homeowners).
Key research findings
This is the eighth edition of the Genworth Homebuyer Confidence Index (HCI), a measure of Australian homeowners’ and non-property owners’ sentiment towards the mortgage market.
In March 2014, the key findings include:
• National homebuyer confidence down since September 2013: The Genworth HCI decreased by 1.7%, from 92.4 in September 2013 to 90.8 in March 2014.
• Some homeowners struggle to meet repayments: Around 28% of homeowners have struggled to meet their mortgage repayments in some months in the past year, and 30% expect a similar struggle over the next 12 months.
• …but are actually far from being in the red: Despite mortgage stress being felt by some, homeowners appear to have quite a buffer built into their finances. The proportion of homeowners using over half of their income to service debt has fallen from 28% in September 2013 to 25% in March 2014. The survey suggests this was because homeowners have reduced their discretionary repayments (i.e. their overpayments) and lower interest rates have also been reducing the minimum payments required meaning that homeowners actually have more after-debt disposable income than before.
• Still a good time to buy, just slightly less so: Despite more than half of the investors thinking now is a good time to buy a home, only 42% of all respondents agree with that sentiment in March 2014, down from 46% in September 2013.
• First homebuyer confidence drops: The FHB Confidence Index slipped to 82.3 in March 2014 from 85.0 in September 2013, but 59% still believe it is a good time to buy property.
• Accessibility tougher for prospective FHBs: Around two-thirds of all homeowners (65%) believe that today’s prospective FHBs will have a harder time getting into the market than the previous generation did, while just under a quarter (23%) thought that it was probably just as hard.
The dream of homeownership burns brightly: Despite one- third of prospective FHBs struggling to save a deposit, 71% think the dream of homeownership remains realistic, up from 67% six months earlier.

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March 2014

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