The latest housing affordability report by iBuildNew, a listing site of homebuilders and land developers, tasked research firm Ipsos to survey 1,030 Australians to gauge their sentiment around buying property in Australia.
Of the 216 people that were first home buyers (FHBs) looking to enter the local property market, 63 per cent said that they believed an affordable house cost less than $450,000, while 76 per cent said they could not enter the property market because they could not save a deposit or secure a loan.
In the two most expensive housing markets, 77 per cent of first home buyers in NSW and 86 per cent of their counterparts in Victoria said they believed an affordable house would cost less than $600,000.
However, despite the median house price in Sydney coming in at nearly double that at $1.152 million, more than half of FHBs in NSW were reportedly able to save a deposit or secure a loan (with 42 per cent saying that this was not the case).
Likewise, in Victoria (where the median property price is $844,000), just two-fifths said they could not get onto the property market because of an inability to save the deposit or secure a loan. However, Victorians were most likely to be able to buy their first home in the next five years, with just 17 per cent saying that it would take longer than that.
Notably, however, it was new buyers in Queensland that were struggling the most with getting onto the property ladder, with 53 per cent citing difficulty accessing a loan or deposit. Those in the Sunshine State were also the most emphatic that an affordable house should cost less than $600,000, with 90 per cent of FHBs saying so.
Adelaidian FHBs were found to be the buyers with the highest expectation of what constituted an ‘affordable’ home, with a whopping 94 per cent saying that it would be a property under $450,000. This is despite the majority of those in the southern state saying that it would take them less than five years to buy their first home (with just 24 per cent saying it would take longer).
Most FHBs were also found to be fairly set in what they were looking for, though, with the researchers finding that, on a national basis, nearly two-thirds (64 per cent) were only prepared to look at properties within their suburb of choice or surrounding suburbs, while only 22 per cent were considering a new build.
Speaking of the findings, iBuildNew CEO Daniel Peterson said: “Housing affordability has become a significant issue over recent years, driven by exponential growth in median house prices and relatively low levels of wage growth.
“While being the most popular cities in which to own a home, Sydney and Melbourne clearly face the most stress when it comes to housing affordability given the lack of new supply to meet growing demand. In addition to this, the growth seen in median housing prices is pushing first home ownership out of reach for many.”
Mr Peterson added that as new build houses and land packages can be “secured at around 40 per cent less than established median house prices”, he believed an opportunity exists for many buyers to think more broadly about alternative ways to enter the property market.
He said: “The economic benefit of buying new is not well understood by first home buyers, with real estate agents doing their best to overcomplicate building a new home to retain demand for established homes.
“The reality is building new doesn’t need to be difficult, and the economics for a first home buyer are really compelling,” Mr Peterson added.
The iBuildNew CEO concluded: “Creating incentives for first home buyers to buy a new home in outer suburbs or even regional areas (as recently announced by the Victorian state government) are terrific initiatives. Not only do they help get more people into their first home, they also drive demand away from existing properties (mainly in the inner suburbs) which over time will help alleviate pressure on housing prices across the board.”
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.