Housing affordability is an emotive topic across the country, and it comes as little surprise that the majority of borrowers surveyed currently believe that getting a foot on the property ladder is harder now than it was for the previous generation.
Interestingly, the Genworth Homebuyer Confidence Index saw a 1.6 point drop from September 2013 to March 2014, which they note was partially to a decline in first home buyer confidence, as well as overall cost of living pressures for those currently holding mortgages.
Home buyers experiencing or expecting mortgage stress did, however, largely drive the decline in the confidence index, said Genworth Australia’s chief commercial officer, Bridget Sakr.
“Of those surveyed, 49% cited the rising cost of living as the key driver of mortgage stress,” said Sakr.
“The high cost of living has remained the number one cause of mortgage stress for homeowners since September 2011,” she said. Of those surveyed, four in 10 make overpayments to their mortgage.
Similarly, the proportion of those using more than 50% of their income to service this debt dropped from 28% to 25%.
The first home buyer component dipped from 85.0 in September to 82.3 in March, driven by fears around unemployment.
“While 71% of first home buyers consider the dream of home ownership to be realistic, this group continues to struggle to save for a deposit,” she said.
A third of prospective home buyers noted it would take them four years or longer to save a 20% deposit, while 60% of all respondents said it would take four years.
Sakr also noted that nearly two thirds of all borrowers believe first home buyers have it tougher than the previous generation did, with 86% expressing a willingness to help their children buy property, but significantly fewer noting they were in a financial position to be able to do so.
“The struggle to enter the property market may also be exacerbated by any future dwelling price growth,” said Sakr.
“This ongoing challenge for prospective first home buyers highlights the value of low deposit options such as Lenders Mortgage Insurance which can help people enter the property market sooner,” she said.
The index surveyed more than 2,000 consumers and analysed the proportion of monthly income expected to be used to service debts, repayment history and expectations for the nest 12 months, as well as their beliefs about home buying.
This article first appeared on Property Observer.