Potential home buyers are being frightened away from the market by the government's proposed carbon tax, it has been claimed.

A new Loan Market survey has found the proposed tax has shaken the confidence of many potential buyers. Asked if the carbon tax affected their confidence in purchasing a property, 57% indicated they were wary of buying due to the tax.

Of the proportion who indicated they were deterred by the tax, 35% said they expected cost of living increases brought about by the tax to scuttle their plans of buying property.

"Our survey shows the carbon tax is not something that looks likely to encourage consumers," Loan Market COO Dean Rushton claimed.

Of the respondents, Rushton said Gen Y were the least likely to be put off by the tax, with 51% saying it would not impact their plans to purchase property.