First home buyers aren't giving up

author-avatar By on February 07, 2020
First home buyers aren't giving up

Photo by Kinga Cichewicz on Unsplash

Young Australians haven't admitted defeat in their quest to buy their first home, with new data showing they're quietly optimistic.

A survey of more than 1,000 Australians aged 18-25 by Lendlease has revealed eight in 10 of them dream of owning their own home, while almost half of them (47%) think they'll achieve that dream within the next five years. 

Overall, 79% of them think they will eventually own their own home. Of this 79%: 

  • One in six think they'll buy by the end of next year; and
  • Another third are confident they'll buy before the end of 2025

Lendlease Managing Director of Communities Matt Wallace says 2020 is the year for first home buyers to enter the market. 

"Not only are interest rates still near record lows, but first home buyers are able to take better control of their finances with a range of industry initiatives designed to help them out," Mr Wallace said. 

"We understand the many challenges facing first home buyers and are ready to help them get their foot on the property ladder." 

Looking to compare low-rate, variable owner-occupier home loans? Below are a handful of low-rate loans in the market.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of October 17, 2021. View disclaimer.

Indeed, 25% of young Australians think 2020 is the time to enter the property market, while 30% are more confident in buying in the next 12 months compared to the past 12 months. 

That's despite the median house price continuing to rise in the latter half of 2019 to more than $545,600 nationally, according to CoreLogic. 

Interestingly, young Australians are skewed more towards building a new home (58%) than buying an existing one (42%), while the main reasons for buying included: 

  • Having a place to call their own (69%) 
  • Independence (52%) 
  • Raising a family (50%)
  • The security a home provides (49%) 

How are they saving? 

Saving for that initial deposit was identified as one of the most challenging obstacles, with 55% listing it as a struggle on the path to home ownership.

This makes sense considering a 20% deposit on that national median price of $545,600 is nearly $110,000.

To combat this lofty goal, Lendlease's research identified the top five ways young Australians are saving for a house deposit, with one in five supposedly "saving hard": 

  1. Cutting back on small expenses (e.g. cafes, eating out, etc.): 45%
  2. Saving money with their partner: 45%
  3. Opening a specific savings account: 36%
  4. Sacrificing a luxury expense (e.g. holiday, new car etc.): 35%
  5. Starting a side hustle: 24%

Lendlease social trends researcher Claire Madden was full of praise for the aptitude young Australians are showing in saving for a home. 

“Despite Gen Y and Z growing up with the rhetoric of rising housing and living costs, they are showing an optimism and resilience in holding onto the great Australian dream of home ownership," Ms Madden said. 

"Over four in five in our younger generations have the desire to own a home, and almost two in five are extremely or very optimistic that it will become a reality.

"Whilst saving for the deposit is seen by many as the biggest obstacle, these tech-savvy, agile and entrepreneurial generations are switched on to new opportunities and are likely to embrace the home-ownership deposit schemes and find a way to see the dream realised."

"Ok Boomer" 

Despite the optimism of young Australians, the sentiment towards older Australians, aka "boomers", hasn't really improved much. 

According to the participants, 79% of them believed the challenge of buying a home today is more difficult than it was for their parents' generation.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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