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The increasing challenges for first home buyers

In today’s real estate landscape, first home buyers are encountering unprecedented obstacles on their path to home ownership. CoreLogic’s data paints a sobering picture, particularly in major Australian cities.

The journey to accumulate a 20% deposit for an average home is a prolonged one. In Sydney, first home buyers must brace themselves for an average of 12.3 years of saving, while Melbourne presents a formidable challenge at 9.6 years. Brisbane follows closely behind at 9.4 years, and Adelaide and Perth add to the complexity with 10.2 and 7.5 years, respectively.

Earlier this year, we reported that Sydney’s property prices have displayed remarkable resilience, defying the broader economic uncertainties. The city’s housing market has remained robust, with prices showing a notable upward trend, further complicating the already demanding journey to accumulate a 20% deposit for an average home.

However, the deposit dilemma goes beyond mere duration. A 20% deposit on the median home value in Australia represents an astonishing 148% of household income. This means that the typical Australian household cannot afford an average dwelling without external assistance, often relying on financial support from family or unexpected windfalls.

Furthermore, the financial burden extends beyond the initial deposit. Based on prevailing interest rates, Sydney home owners are required to allocate approximately 50% of their income to service a new mortgage. Adelaide, identified as the second least affordable housing market, demands around 47% of household income to maintain an average home.

These statistics underscore the growing challenges faced by home buyers, particularly first-timers, who are finding it increasingly difficult to enter the property market. The dream of home ownership is becoming more elusive due to the combination of prolonged savings periods, high deposit requirements, and the weight of mortgage servicing costs.

In such a competitive and ever-changing real estate market, the adage holds true: “the best time to buy is yesterday, but the next best time is today.” Property values continue to rise, and delaying often means a heavier financial burden in the future.

To navigate these formidable conditions, it’s essential for potential buyers to seek expert guidance. Rental costs have also been steadily rising nationwide and as Australians seek ways to mitigate these escalating rental expenses, including downsizing or exploring shared housing arrangements, buying a home still remains a promising alternative for those who aspire to secure a place of their own.

For those who prefer not to rent and dream of home ownership, there are viable options available. One such avenue is enlisting the assistance of a mortgage broker who can guide you through the process of obtaining a home loan. This route opens up possibilities to navigate the challenging real estate landscape and turn the dream of owning a home into a tangible reality.

For those seeking expertise from some of the best mortgage brokers of 2023 as awarded by the Australian Broking Awards, you can trust that these professionals are recognised for their excellence in the field, making them an ideal choice to guide you through the intricate process of securing a mortgage that aligns with your specific needs and financial goals.

Consulting with a mortgage broker can also help you assess a reasonable borrowing capacity and identify any government policies or incentives that support first home buyers. These professionals offer invaluable assistance in a challenging market, potentially turning the dream of home ownership into a reality despite the formidable challenges.

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