Finder makes money from featured partners, but editorial opinions are our own.

First home buyers frozen out


ice houseCompetition from upgraders and investors is freezing first home buyers out of the market, new research has suggested.

New figures from CoreLogic show home values in Sydney and Melbourne have substantially outpaced wage growth over the past eight years. The figures show house prices in Sydney have climbed 80.2% from December 2008 to April 2016, and have risen 67.8% in Melbourne over the same period. In contrast, wage growth in New South Wales and Victoria increased by only 23% and 23.6%, respectively.

Combined capital city house prices rose 51.7% over the period, while wages grew 23.4% and the cumulative change in inflation was 17.1%.

Along with the increase in house prices, lending to investors and upgraders saw substantial rises in NSW and Victoria from December 2008 to March 2016, while lending to first home buyers fell. As such, CoreLogic researcher Cameron Kusher said first home buyers face a difficult market competing with investors and upgraders whose homes have gained significant value.

“Those that do not yet own a property will struggle to compete with investors and upgraders who have been active in the market and where significant equity has been acquired,” Kusher said.

Kusher suggested that first home buyers in Sydney and Melbourne would have to look outside the cities, though he conceded the suggestion “may seem a little simplistic” as it could require the sacrifice of infrastructure and job opportunities.

While Kusher said first home buyers faced difficult challenges, he warned against more grants to aid buyers, “as they have tended to just push up the cost of housing”.

Looking to buy a first home?

If you are looking to buy your first home, read our guide to make sure you’re armed with the right information

Find the right home loan now

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site