There's been a big rise in Australians who think now is terrible time to buy a house

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Australian homebuyer confidence has dropped for the first time since March 2014, according to the latest release of the Genworth Homebuyer Confidence Index (HCI).

The HCI, which is a measure of homeowner and non-property owner sentiment toward the housing and mortgage market, fell 1.4% to 98.2 in the March quarter. Genworth said the fall was driven by:

  • an 11% increase in the proportion of homeowners who have experienced mortgage stress
  • a 13% increase in the proportion of homeowners who expect mortgage stress
  • a 13% decrease in the proportion of respondents who believe now is a good time to buy a home from September 2015 to March 2016.

With mortgage rates at or near generational lows, the increase in the number of households which are either experiencing stress, or expect to increase stress, is a troubling revelation about the state of household finances at the moment.

That’s particularly so given it was Australian households’ domestic consumption – and their willingness to run the savings rate down to a post GFC low of 7.6% – which was the big driver of Australia’s economic growth in the fourth quarter of 2015.

The index also showed that first home ownership has crashed 8.9% over the past 13 months to an HCI of 93 in March with only 50% of respondents seeing now as a good time to buy a home and 24% expecting mortgage stress in the next 12 months – up from 14% in September 2015.

First home buyers (FHBs) say the biggest hurdles to purchasing are higher property prices (33%) and the ability to save the required deposit (24%).

Genworth says:

“This indicates that accessibility (the ability to enter the property market), as opposed to affordability (the ability to meet mortgage repayments), remains the key barrier to entry into the property market”.

That’s certainly what the responses to the survey suggest.

But high house prices are correlated with bigger mortgages. So given 24% of FHBs are worried about mortgage stress in the next 12 months, there is a realistic chance it is high prices and the income it takes to service the mortgage that is required to enter the market that is also a big barrier.

Overall, more than half of those surveyed believe now is not a good time to get into the market.

The HCI shows that only 44% of those surveyed believed now is a good time to invest in property while just 48% of those surveyed overall believe now is a good time to buy a house

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