20th April 2016 | Megan Neil | MSN
Investors are thinking twice about entering the property market as out-of-cycle rate rises and speculation about a federal election and changes to negative gearing dent homebuyer confidence.
National homebuyer confidence has dipped for the first time in two years – although it remains near record levels, lenders mortgage insurance company Genworth’s latest report shows.
The proportion of homebuyers who believe it is a good time to buy has fallen and that sentiment is even more pronounced among investors, said Genworth chief commercial officer Bridget Sakr.
“Speculation, fuelled by media, of a housing bubble, an upcoming national election, proposed changes to negative gearing policy and recent changes in lenders’ policy relating to investment loans are some of the likely drivers of this change in consumer confidence,” Ms Sakr said.
Many lenders have hiked interest rates for investors and made it harder for them to get loans and, Ms Sakr said, out-of-cycle rate rises were among factors potentially causing consumers to think twice about investment lending.
The federal opposition’s policy to limit negative gearing to newly constructed homes from July 2017 has likely dented investor confidence despite the high probability that it won’t come to pass, Genworth’s Streets Ahead report said.
“Until the policy regarding negative gearing is resolved, investors are probably holding off entering the market,” Teachers Mutual Bank chief executive Steve James said in the report.
Ms Sakr said competition was strong in the owner-occupier space as lenders try to win market share.
But the report shows the ability to enter the property market, as opposed to affordability, remains the key barrier to buying a first home.
“As they’re out there trying to promote owner-occupier mortgage lending there’s a segment that’s really finding it difficult to partake in that,” Ms Sakr said.
The overall homebuyer confidence index fell slightly to a reading of 98.2 in March 2016, from 99.6 in September 2015.
Genworth said the fall was driven mainly by an increase in the proportion of homeowners who have experienced or expect mortgage stress and a reduction in the number of respondents who believe now is a good time to buy a home.