Almost 40 per cent of first home buyers who purchased within the last two years have admitted they “couldn’t buy where they wanted”, a survey has found.
Mortgage Choice’s latest First Home Buyer survey found that 37 per cent of respondents weren’t able to buy where they wanted to, a figure which was up from 34.7 per cent last year.
Of those people who were unable to buy properties in their desired area, 85.2 per cent said it was because these properties 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.”
Mr Flavell noted that many first home buyers also wanted to be “close to the action” and buy property as close to their capital cities as possible, however “property prices across most of the capital cities have risen fairly steadily over the last 24-36 months”.
He added: “In Sydney and Melbourne property prices climbed 11.3 and 11.5 per cent respectively over the last 12 months to July 2016. As a result, these cities boast media 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.”.
The news that first home buyers are struggling to buy in their desired areas comes after senior economist Robert Mellor expressed concerns of the long-term trends of home ownership.
Mr Mellor said that “home ownership is in sharp decline” for the under-35s and that “first-time buyer demand is not recovering … it’s very weak, particularly in NSW”.
“Many people won’t get into the market in their late 30s and 40s … they are in for permanent rental,” he said, adding, “It’s a major issue and one that we’ll need to watch closely in terms of how it impacts upon the market.”
However, Mortgage Choice’s Mr Flavell noted that first home buyers shouldn’t let disappointment stop them from getting into the housing market.
He concluded: “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.”
“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.”