What first home buyers fear the most – and how to break into the market sooner
- Missing out on dream location is the biggest concern of new buyers (72%)
- One third (33%) of first home buyers need help from parents
- Tips to break into the property market sooner
28 June, 2016, Sydney, Australia – First home buyers are more worried about missing out on their dream location rather than saving a deposit, new research from finder.com.au, Australia’s biggest comparison website, shows.
A national survey of 1,017 Australians found that 72% of first home buyers fear their dream location is out of reach, while paying too much for a property is their next biggest worry (70%).
Three out of five (62%) are most concerned about saving for a deposit.
Ongoing maintenance costs (64%) and property values going down after they buy (59%) also make up the top five fears of first home buyers.
The biggest fears of Australian first home buyers
|Fear||% of respondents who fear|
|Affording your dream location||72%|
|Overpaying for a property||70%|
|Ongoing maintenance costs||64%|
|Saving a deposit||62%|
|Property values going down after you buy||59%|
|Personal sacrifices from buying a home||59%|
|Qualifying for a home loan||56%|
|Buying in the wrong location||54%|
|Meeting ongoing repayments||53%|
|Committing to staying in the same property||46%|
|Buying the wrong property type||45%|
Bessie Hassan, Money Expert at finder.com.au, says the highest proportion of people worried about buying their first home were aged 30-35.
“Buying your first property can be an overwhelming process and these fears can become both emotional and financial hurdles for those trying to get onto the property ladder,” she said.
“One in three (33%) Australian first home buyers admitted to needing help from their parents in order to break into the property market, whether this be financially, or whether it means having them as guarantor or landlord.”
The survey found 64% of first home buyers are currently looking for a home to live in while a further 19% look for an investment property that they plan on moving into later. Just 16% are purely after an investment.
“Those house hunters earning $70,000-$80,000 are most likely to buy within six months, while those who make $100,000-plus per year were most likely to buy in 1-2 years ,” she said.
But buying a first home is more of a pipedream of those earning under $30,000.
“Low income earners – those with an income of under $30,000 – make up the highest proportion of buyers (18.22%) looking to purchase in two years or more,” she said.
Nearly a third of those surveyed were already actively looking for their first property, with almost one in five (19.3%) looking to purchase within the next six months.
“And they’re not going it alone with more than three out of five first home buyers (65%) planning to purchase with a partner,” she said.
The survey found that the most common arrangement for those earning under $30,000 was buying with both a partner and parents.
Capital city breakdown
- Adelaide: Most Adelaide residents (11%) intend to buy property within 1-2 years time. Most of this group (64%) plan on buying a home to live in, followed by 21% who want to buy an investment property they don’t plan to live in later. In Adelaide, just 7% of prospective buyers purchase alone, while the majority (13%) plan to purchase with a friend.
- Brisbane: In Brisbane, most people (15%) intend to purchase real estate within 7-12 months, and the vast majority (66%) will buy a home to live in. Interestingly, most respondents from this group (14%) plan on purchasing a property with a sibling. 26% will need a parent to be a landlord, which is the second highest percentage across all capital cities.
- Melbourne: On the Eastern seaboard, Melbourne is the capital city with the highest proportion of people looking to buy in the next 1-6 months (35%). Most of the people not looking for financial help from their parents were also from Melbourne (26%) which is the highest percentage across all capital cities. A total of 29% of those purchasing alone live in Melbourne.
- Perth: It may take those living in Perth longer to purchase a home, with the majority (10%) intending to buy in over 2 years time. 68% want to buy a home to live in which is the second highest percentage that fall within this category, followed by Canberra. Most of the respondents in this group believe they will need their parents to guarantor on the home loan.
- Sydney: Sydney has the highest proportion of people looking to buy in 7-12 months time (29%). Nearly a third (30%) of those purchasing alone live in Sydney. However, Sydney is where most people need help from parents in order to purchase their first home.
Age bracket breakdown
- The age group of 30-35 year olds was the most dominant of those not needing any financial assistance, or taking on their parents as a guarantor.
- 18-20 year olds were most likely to purchase a first property as an investment with no plans to move in later.
- 21-24 year-olds were the most likely to be purchasing alone.
Top tips for first home buyers
- Get pre-approval: With a pre-approved home loan up your sleeve, you have an approved amount to borrow, which can then give you an upper edge when it comes to negotiating the sale price. A lender may also consider you to be a more serious home buyer rather than someone who is just ‘looking.’
- Apply for the First Home Owner Grant early: Lodge your application at the same time you apply for your home loan. In most cases, you can submit the application through your lender as it will be processed faster than if you send it to the State Office. To see which grants and concessions are on offer, jump on to your state government website.
- Shrink your debt: Close credit card accounts you don’t need, apply for a 0% balance transfer, or lower your credit card limit. Finish paying off car or personal loans to give yourself the best chance of borrowing the amount you need. Remember, your existing debts can reduce your borrowing capacity when you apply for a home loan.
- Save a big deposit: The bigger the deposit, the larger the equity you will have in your property from day one. This also means you will pay less interest. For a full documentation loan, aim for at least a 20% deposit so you don’t have to pay lender’s mortgage insurance.
- Don’t over-apply: Be selective about the home loans you apply for because each time you apply for a loan it shows up on your credit file. If you have several enquiries on your credit file, it could raise a red flag with the lender.
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
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