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First home buyer confidence has grown to levels not seen since September 2012, according to the Genworth Homebuyer Confidence Index (September 2014).

First home buyer confidence has grown to levels not seen since September 2012, according to the Genworth Homebuyer Confidence Index (September 2014).

Buyer confidence has had its up and downs over the past couple of years, but the latest survey by Genworth shows that overall, buyer confidence has had a lift in confidence for a number of reasons. 

Genworth Australia chief commercial officer Bridget Sakr said that “they suspect the increase in confidence is a result of 13 months of historically low interest rates, as well as increased certainty around the May federal budget and the health of the economy.”

“Interest rates have virtually disappeared as a source of mortgage stress with just three per cent of struggling homeowners now citing this as a key factor of mortgage stress compared to 50% in September 2011.”

The First Home Buyer group is sensitive towards the interest rate issue, so it seems that the long period of low interest rates has had a positive impact on the first home buyer’s attitude towards buying.  

However, the survey also shows that first home buyers are turning to non-savings sources in order to save for a deposit. 12% of first home buyers took out a personal loan compared to 4% of mortgagors and 7% borrowed on a credit card compared to 2% of mortgagors. In addition, although 78% of mortgagors used their savings for a deposit, only 69% of first home buyers did the same. 

This reliance on debt could possibly put further strain on first home buyers down the track, particularly if interest rates do increase. 

The Genworth Homebuyer Confidence Index also focused on prospective first home buyers. Prospective first home buyers are considered to be someone who does not own a property, but is looking to buy in the next 24 months. The survey found that they were paying an average of $313 a week in rent, compared to non-property owners who paid $255 a week (on average).

Whilst prospective first home buyers are planning to purchase their first home, there are a number of reasons why they have not taken that first step. Some reasons include: difficulty of saving for a deposit, income and not being able to afford repayments and choice factors such as being happy to rent or they are picky with the location. 

Overall, while overall buyer confidence is increasing, there are still a few drivers which are stopping prospective first home buyers from entering the property market over the next couple of years.