Victorians lead home buyer confidence to highest level since 2007: Genworth report

Home buyer confidence is at highest level since the GFC, with one in two Australians saying now is a good time to buy, according to the latest Genworth Homebuyer Confidence Index.

The half-yearly index rose 2.2 points to reach 98.4 — its highest level since 2007 and 8 points above its low of 2008.

On a state-by-state basis Victorians registered the most improvement in sentiment with its index rising 7.7 points from a low of 92.3 in March 2012, overtaking New South Wales and Queensland. South Australia saw a 3.3 percentage point increase in the index, the second highest among the states.

Western Australia had the smallest increase in confidence but held on to its lead, with surveyed Western Australian borrowers being the least likely to have experienced, or to expect, difficulty meeting repayments.

Tasmanians are the least confident about buying a house with a sharp drop from the March survey.

The improvement in the overall index was driven by a marked rise in the number of people who say now is a good time buy versus six months ago and improvements in housing affordability.

Nearly half (49%) of 2,000 adults surveyed (both existing home owners and those looking at getting onto the property ladder) believe now is a good time to buy a home compared with 39% who said it was a good time to buy in the March 2012 survey - a new high since Genworth started compiling the Index in 2007. 

On this measure Queenslanders are the most positive with 54% of respondents agreeing now is a good time to buy.

Genworth CEO Ellie Comerford tells Property Observer the key message to take home from the survey is that consumer sentiment is moving the right direction.

“In the face of economic background, regional pressure points, cash rates it’s good to see the index increase to its second highest level ever.

She says Tasmania is the only state to buck the trend with its high rate of unemployment relative to other states the key reason.

The September survey also recorded a drop in mortgage stress  with the proportion of surveyed mortgage holders who experienced difficulty meeting repayments in the last year falling from 22% in March 2012 to 18%.

The proportion of borrowers expecting difficulty meeting repayments in the coming year fell from 22% to 19% over the same period.

Alan Shields, managing director of research firm RFi, which compiled the report on behalf of Genworth, says on both measures of repayment history and expectations, the results are at levels not seen in 18 months.

Shields says a drop in interest rates appears to be a key reason for the fall in mortgage stress in the September survey.

“Only one in four respondents who say they are experiencing mortgage stress said interest rates were a problem, compared to half of respondents in the last survey,” says Shields.

He says a rate cut next week – as many economists are now tipping - will have a further positive impact on home buyer sentiment.

The report also found that home buying sentiment remains high among first-home buyers with more than half (54%) of surveyed first-home buyers (FHBs) believing it is a good time to buy a home – a figure which has more than doubled in the last two years.

However, first-home buyer confidence fell marginally (0.5%) from March 2012, to 98.5, remaining just ahead of the national average of 98.4.

The index is compiled based on five measures:

• The proportion of monthly income used to service debts
• The maximum loan-to-value ratio (LVR) borrowers are comfortable in borrowing
• Their repayment history over the last 12 months
• Their repayment expectations for the next 12 months
• Whether they consider now a good time to buy a home.