Residz Team 3 min read
A new Canstar survey of first home buyers shows they’re struggling emotionally as they try to enter the market. The Canstar First Home Buyer survey has revealed 90% of potential first home buyers are stressing over saving a big enough house deposit to enable them to buy their first home.
But, is it the right time to buy anyway? With the cost of living, rising interest rates, and mind-boggling house prices most Aussies don’t think so. Fewer than 1 in 5 (18%) of Aussies think now is a good time to buy, according to a recent National Australia Bank survey.
Is it a good time to buy in my state?
In Queensland the number of people who thought it was a good time to buy a home dropped to 14%, the lowest result of the states in the NAB survey, whereas 27% of survey respondents in the ACT think now’s a good time to buy.
In Tasmania, 15% think it’s a good time for buying, in Victoria it’s 21%, NSW 18% and SA 14%.
NAB Executive Home Ownership, Andy Kerr says NAB predicts a drop in housing prices of around 18% in the next 18 months, which would “take us back to January 2021 levels”.
And this means, many home buyers are going to play a waiting game. Unit prices at the top end of town are falling as well as house prices are plunging at their fastest rate in 40 years.
“With a combination of house prices declining and the recent release of the First Home Guarantee Scheme, it will renew optimism for first home buyers,” Andy said in a NAB press release on the survey. “So despite rising rates, we’re still seeing a steady intention of people looking to buy, even if sentiment is showing us that buyers may wait a little longer”.
First home buyers struggle to scrape together deposit
However, as we said earlier, first home buyers especially are stressing over saving a big enough deposit. Canstar reports 42% feel “very or extremely stressed” and 42% feel “somewhat stressed” over this.
“Canstar’s analysis showed that with the national median house price sitting at $816,659 according to CoreLogic, first-home buyers would need to scrape together $81,666 for a 10% deposit and $163,332 for a 20% deposit.” - Canstar press release.
“It would take a dual-income couple over six and a half years to save a 20% deposit…..while a single buyer would take close to 13 years,” says Effie Zahos, Canstar’s editor-at-large and money expert. “Even a 10% deposit would take a couple almost four years and a single more than seven years.”
“This is a long time to be saving, '' she added, “and it's easy to see how buyers could become disheartened as living costs rise.”
It’s no wonder more renters are sharing their digs to save money, and first home buyers are looking to regional areas or waiting for prices to fall in order to reduce the size of their deposit and mortgage.
Budget blow-outs for first home buyers
Those who do manage to save a deposit and tackle the tough buying conditions are finding they have to blow their budget to get into the property market.
Finder’s First Home Buyer Report 2022 found more than a third (37%) of first home buyers who had purchased a home ended up exceeding their budget.
The survey of 1001 first home buyers in Australia included 372 who had already purchased. 8% of recent home buyers reported paying more than $100,000 over their budget. Another 8% said they paid between $50,000 and $100,000 over.
Close to half of buyers from New South Wales (41%) and Queensland (40%) blew their budgets, compared to 31% of Victorian buyers.
Finder money expert Sarah Megginson says high prices, but also underquoting by real estate agents, were two reasons for the problem.
"It's illegal but it does happen, particularly in the case of auctions, where underquoted prices can attract more buyers and lead to a bidding war,” she says.
How do you enter the property market?
So what can determined home buyers do to secure themselves a roof over their head?
Effie Zahos had this advice for first home buyers:
“Switching focus to a unit in an entry-level suburb with a lower price point to cut the time to save will still be challenging, but it can mean getting on the ladder sooner.”
A helpful note if you’re selling a home, buying one, or just love learning about real estate; make sure you download a free property report from Residz.
Photo by Chris Benson on Unsplash