Perth the most affordable capital for first home buyers

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on December 13, 2021 Fact Checked
Perth the most affordable capital for first home buyers

Analysis on first home buyers and renters in capital cities and regional areas shows regional SA, WA and QLD more affordable than capital cities.

The National Housing Finance and Investment Corporation (NHFIC) shows Melbourne is the most affordable capital city for renters, while Perth is the most affordable capital city for potential first home buyers. 

Melbourne's improved affordability was largely influenced by the extended lockdowns faced in the city, which has led to a northern migration over the past year.

The mass exodus has led to increased vacancies and released pressure on pricing.

First home buyer affordability deteriorated substantially in regional NSW and regional Tasmania. In these regions, the bottom 40% of income earners can afford up to 10% of homes for sale. 

The report found first home buyer affordability deteriorated substantially in regional NSW and regional Tasmania.

In these regions, the bottom 40% of income earners can afford up to 10% of homes for sale.

Sydney and Melbourne saw modest improvements to rental affordability on average due to a decline in net migration driving rents lower, although vacancy rates have been declining.

Rental affordability remains challenging in most cities and regional areas for the bottom 40% of income earners, who can typically afford to rent up to 10% of properties.

Deposit still the main barrier for first home buyers

Despite improved rental affordability in Sydney and Melbourne, home ownership for first time buyers is at its least affordable in five years. 

Recent research from Bluestone shows all states reported falls in first home buyers except for ACT through the June quarter. 

This comes as the average home loan value continues to surge and remains 'well ahead' of the values recorded this time last year.

The latest RBA ratio for house prices to debt, shows the recent housing boom has vastly outpaced borrowing capacities. 

Housing-prices-and-household-debt.gif

Based on Domain's most recent median household price data, home buyers would need a deposit of just under $300,000 to buy an average house in Sydney. 

In Melbourne, a 20% deposit on an average home would be $220,000, while in Brisbane an average deposit would be $140,000. 

These numbers have shot up more than 15% in all capital cities, except Perth, vastly outpacing wage growth. 

"The sheer affordability of keeping up with rapid house price gains is proving a barrier for buyers, especially first home buyers facing spiralling deposit goals and poor interest accrued on savings," the Domain report read.

"This has resulted in the number of home loans for NSW owner-occupier first home buyers dropping 21% from the recent March high."


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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
VariableMore details
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEES

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of January 17, 2022. View disclaimer.


Image by Vivek Kumar via Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

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