FHBs struggle to buy property where they want

September 29, 2016

Almost 40% of first home buyers who purchased within the last two years have admitted they couldn't buy where they wanted.

According to Mortgage Choice's latest First Home Buyer survey, 37% of respondents said they couldn't buy exactly where they wanted to – up from 34.7% in 2015.

Of those who said they couldn't afford to buy where they wanted, 85.2% said it was because the properties in their desired area were out of their price range.

Mortgage Choice chief executive officer John Flavell said it was disappointing to see so many first home buyers struggling to buy where they want.

“While it must be very disheartening for first home buyers to struggle to buy in the area they want, it isn't a surprising phenomenon,” he said.

“Generally speaking, first home buyers will want to buy in an area that is close to family, friends and work. However, in most cases, these are generally the more expensive areas.

“A lot of first home buyers want to be close to the action and buy property as close to their capital city as possible. However, as we have seen, property prices across most of the capital cities have risen fairly steadily over the last 24 – 36 months.

“In Sydney and Melbourne, property prices climbed 11.3% and 11.5% respectively over the 12 months to July 2016.  As a result, these cities boast median dwelling prices above $500,000.

“Understandably, it can be very difficult for many first home buyers to save the deposit needed to buy a home worth at least $500,000.”

Mr Flavell said while first home buyers might be disappointed to learn that they cannot afford to buy where they want, they shouldn't let this stop them from getting into the property market.

“Property can be a great investment and, once in the market, home owners might find it easier to purchase a property in their desired area,” he said.

“First home buyers need to think sensibly when buying property, and understand that while they cannot afford their dream home today, that doesn't mean they won't be able to afford it in the future.”

Given that interest rates are so low at the moment and the cost of borrowing has never been more affordable, Mr Flavell said the biggest hurdle facing first home buyers is saving the deposit.

“It is likely that saving a property deposit has become the most arduous task for first home buyers. For those trying to save for their first home, the key is to be diligent and have a robust budget in place,” he said.

“It also makes sense for first time buyer to review their spending habits and see where they can cut back easily without negatively impacting their lifestyle.”