The CEO of a leading mortgage brokerage has advised first home buyers to use cash over card, move back in with their parents, and set aside 10 per cent of their salary to save enough money to afford a deposit.
Mortgage Choice chief executive officer John Flavell noted that the company’s Evolving Great Australian Dream white paper found that 9 in 10 first home buyers (FHBs) said that getting into the property market was “hard”, with more than 30 per cent labelling it as “extremely hard”.
Stating that the statistic was “startling”, Mr Flavell added it was “not altogether surprising” given that the stronghold markets of Sydney and Melbourne continue to see property price growth outpace wage growth.
Indeed, data from CoreLogic shows the average median dwelling price across the combined capital cities rose 10.9 per cent over the 12 months to November 2016. Meanwhile, the Australian Bureau of Statistics shows that the average full-time wage rose by just 2.2 per cent over the same time period.
“This data just goes to prove how hard it is for first time buyers to achieve their dream of property ownership,” Mr Flavell said.
“Of course, while it is becoming increasingly difficult for first home buyers to get their foot onto the property ladder, it is not impossible.”
He outlined that by following some “simple tricks and hacks”, which “don’t require you to give up on all the little things you get enjoyment from, like your daily coffee”, FHBs could save enough for their property deposit.
Top 3 tips
“The first strategy involves saving a specific and regular portion of [your] wage,” Mr Flavell said.
“Our research found a majority of Australians don’t consider themselves to be financially knowledgeable, with 60.5 per cent rating their literacy skills as average or poor.
“Everyone has a different set of circumstances including work, living arrangements, income and age that would affect their ability to save. A helpful guide is putting 10 per cent of your salary into your savings account and locking this money away so that it can’t be accessed easily.”
Another “savings hack” put forward by the CEO was using cash rather than cards when possible.
He explained: “Australians love their credit cards, but while they are a convenient method of making purchases, it is easy to lose track of your spending.
“If you want to become more diligent with your spending, consider going old-school and using hard cash. Cash is finite, so it will force you to be conscious about your finances and think twice before you spend it on that impulse purchase.”
Finally, Mr Flavell said moving back home or into cheaper accommodation was a good way for FHBs to save money.
“The idea of moving back in with your folks may not sound exciting, [but] if you are willing to live with your parents for a period of time, and it is feasible, you will be able to save a significant amount of money.
“Your living costs will be substantially lower and the money you save can make a large contribution to a deposit for your first home.”