QBE LMI has released its latest Mortgage Barometer Survey, which shows that the overwhelming majority of First Home Buyers (FHBs) believe that Australian housing is overvalued. From Property Observer:
More than three quarters (76%) of first-home buyers believe property is overvalued with nearly half (48%) believing prices are overvalued by more than 10%.
In comparison just 41% of owner-occupiers and 48% of Australians believe property prices are overvalued, according to the online survey of 1,107 adult Australians responses of which 763 have a mortgage, 680 considering buying property and 399 qualifed as both.
This finding combined with concerns about changes to first-home buyer grants favouring new homes only and another finding from the survey – 69% of FHB respondents worry they’ll never be able to afford their own home – provide insights into why the segment of the market has shrunken in recent times.
Other findings from the report [also] suggest a frustrated first-home buyers market despite recent improvements in affordability.
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Over the past year, I have argued that one of the key reasons why housing construction will fail to fill the void left as the mining boom unwinds is that land prices are already over-inflated, pricing homes above what many FHBs can afford or are willing to pay. Until land prices are re-set at a lower level, overall FHB demand will continue to disappoint, irrespective of further cuts to interest rates.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
