Homeloans Home Buyer Barometer
Skyrocketing cost of living outstrips rising interest rates concerns, according to latest home buyer research.
Although Australians are bracing for an interest rate rise ahead of Christmas, home buyers are currently more concerned about the rising cost of living, according to the latest Homeloans Home Buyer Barometer.
The survey by non-bank mortgage provider Homeloans Ltd of more than 2000 current and potential homebuyers from across Australia showed that skyrocketing everyday living expenses far outstrips interest rates as their greatest financial concern over the next 12 months (34 per cent compared with 24 per cent). And interest rates were less of a concern than they were in April, when they were the number one financial concern amongst home buyers (32 per cent compared with 28 per cent for increasing living expenses.)
The Homeloans Home Buyer Barometer also confirmed the recent findings from the Australian Bureau of Statistics, which showed activity in the first home buyer market has slowed significantly since the phasing out of the First Home Owners Boost.
“Of those who are considering purchasing a property within the next 12 months, we have seen an 11 per cent decrease in the number of first home buyers since April this year. Conversely, our research showed that investors are becoming more active, with the number of respondents looking to buy a property growing by 16 per cent since April,” says Homeloans national marketing manager, Will Keall.
“However, more flexible lending policies are making market conditions more favourable for first home buyers, so we may well see a return to the market for this segment. A number of lenders – including Homeloans – have provided more versatile mortgage options, which is heartening news for first home buyers.”
Over the past few months Homeloans has changed the lending policy on its MoniPower loan to allow home buyers to borrow up to 95% of the value of the property. This policy change opens the door to a number of would-be borrowers, especially first home buyers, who would otherwise be unable to obtain finance.
The Homeloans Home Buyer Barometer also showed that high property prices are the greatest barrier to home ownership for all types of home buyers (first home buyers, owner-occupied non-first home buyers, investors), followed by saving for a deposit and ability to meet repayments.
“However, as credit policies are becoming more flexible and lenders are prepared to lend at a higher LVR (loan to value ratio) than in recent times, saving for a deposit may well decline as a barrier,” Keall says.
Other findings of the Homeloans Home Buyer Barometer included:
- Three quarters of first home buyers seek to pay off their loan before the end of term
- Almost half of first home buyers are saving for more than two years for a deposit – twice as many as other owner-occupied home buyers; one quarter of first home buyers save for less than a year
- For first home buyers, affordability is the most important factor in choosing a home, followed by perceived safety of the area and the right style and size home
- For investors, affordability is still first, followed by capital growth and rental income potential
- 24 per cent of respondents are planning to undertake renovations this spring/summer – the majority of whom are investors. Of these, 29 per cent plan to renovate their kitchen and/or bathroom whilst 22 per cent will give their property a new lick of paint
- 70 per cent of respondents will use their own savings to fund renovations, compared with 13 per cent opting to refinance an existing property
- 40 per cent of those planning renovations this season put their plans on hold during the GFC