The Real Estate market in Australia is becoming increasingly harder to break into for first home buyers.
Once seen as the great Australia dream, being a first home buyer is becoming harder and harder due to a number of reasons.
The price of buying your first home in Australia is a huge factor in the ability to purchase. There is also a strong population growth that plays a role in increasing house prices. The average household debt is also increasing, with people spending above their means. This coupled with overseas investors and annual income not increasing but average living expenses increasing means that the average joe may never be able to afford to buy their first home.
The median house price in 1982 was 5 times the average annual income. The median house price today in Melbourne is 10 times and a staggering 14 times the average annual income in Sydney.
Greg Trouton, the CEO of the Real Estate Institute of South Australia (REISA) knows just how tough it can be for young people getting their first home.
“It is very difficult to get into the market place. Finding the deposit is incredibly difficult. Young people find the accumulation of the funds difficult and some reach out to older family such as parents to assist them,” says Mr Trouton.
Preparation is the key to getting a successful outcome when buying a home.
“Do your homework and make sure that whatever you can borrow can be maintained even if there are interest rate increases or a change in their income status. Be prepared,” says Mr Trouton. Difficulty buying into the market lies especially in Sydney and Melbourne.
“Generally speaking, the eastern states are all difficult. Some have had double digit capital growth rates albeit they have come off a bit of late, still means that affordability is low. Adelaide and Perth, with median house price of 470k and 440k respectively are by very definition a lot more affordable compared to the eastern states of closer to 7 figure numbers”, says Trouton.
Local South Australian resident, Alison Durward says breaking into the housing market is difficult but not unachievable “I thought we would never be able to buy a house as we would never be able to save a 20 percent deposit to escape paying the mortgage lenders insurance. That is when I started researching and found Homestart”.
Homestart, a South Australian run business aims at getting young people into the housing market with as little as 3% deposit as well as saving on upfront fees.
The SA Government lender’s annual report revealed that Homestart had approved 1674 home loans, totalling $432 million just in this last financial year alone.
Bianca Evan is a local Sydney resident, says that she has been saving for 5 years and only has just enough for a home loan deposit of recent “I have been saving for 5 years or more now and I finally have 20 percent to be able to purchase my first home for around the 400k mark”.
Saving hard, getting the right advice and having the right tools is key to be able to buy your first home in this climate.