After pulling down the Index in the March edition, Queensland has seen a rebound of confidence as the state recovers from recent natural disasters.
Excluding Queensland data, the Genworth HCI would have seen an even greater fall over 2011. Victoria had the biggest confidence fall in the period, likely driven by the highest Consumer Price Index (CPI) increase in the nation and having experienced greater mortgage stress in the last six months than borrowers anticipated. Western Australians replaced Queenslanders as the most pessimistic borrowers as concerns about mining and carbon tax reform, and a volatile Western Australian property market weigh down sentiment.
We found in this survey that a greater proportion of households said they had been affected by natural disasters in some way compared to the March edition, indicating a delay in the flow-on impact of these events. Confirming Genworth research that disaster effects can be prolonged, 41% of those impacted are still recovering. However, the majority of affected households (almost 60%) have already recovered, with many more progressing toward recovery.
Almost half (48%) of all Australian business owners have also been impacted by the Queensland floods and 40% of these have yet to recover all their losses. Around a third (32% of those affected by floods in Victoria to 38% of those affected by the Queensland floods) of businesses affected by major natural disasters across the nation were inadequately protected by insurance. Despite these setbacks, most business owners are still able to meet their mortgage repayments and are not suffering from any great degree of mortgage stress.
First home buyers save longer, sacrifice more to achieve the dream - The high cost of living is also contributing to the affordability problems keeping many potential first homebuyers (FHBs) from realising their dream of home ownership. Indeed, many would-be FHBs are already in significant debt having borrowed to meet everyday living costs.
Despite cost of living rises and low home affordability, Australians are still aspiring to become FHBs, even cutting back on necessities as well as discretionary spending to save for a deposit. Once in the market, FHBs are faring better than other homeowners; borrowers who bought their first home in the past year are more optimistic than average about their ability to meet mortgage repayments. FHBs tend to be more rate sensitive than average, so this higher confidence level may reflect steady interest rates over the surveyed period.
This edition of the Genworth HCI shows that mortgage stress increased over the past 12 months across Australia to the highest level recorded since 2008, as rising cost of living pressures continue to strain households.
Borrowers are also becoming more pessimistic about their ability to meet mortgage repayments in the coming year, yet 36% of Australians still believe it’s a good time to buy a home and the Aussie dream of home ownership is still alive
Streets Ahead is a biannual report into the current and historical levels of confidence among Australian homebuyers and aspirational borrowers, based on surveys of more than 14,000 Australians between 2005 and 2011.