Aussies losing hope in ‘Great Australian Dream’

According to Mortgage Choice and CoreData’s Evolving Great Australian Dream 2018 whitepaper, which involved a survey of 1,013 Australians, 86.2 per cent of prospective home buyers said that it’s “increasingly difficult” to purchase a free-standing home, with 90 per cent of respondents pointing to high property prices.

Seven in 10 Australians also said that there is a need to reimagine the new Australian home ownership dream.

Mortgage Choice CEO Susan Mitchell noted: “Owning a property has long been a cornerstone of the Great Australian Dream. However, with the growth in house prices, especially in metropolitan areas, the dream is evolving to encompass options beyond the traditional free-standing home on a quarter-acre block.”

Further, the data revealed that the attitudes towards apartment living are changing, with 62 per cent of respondents saying that apartments “don’t carry the same sense of home and permanency” as a free-standing house, down by 13 per cent from 75 per cent in 2017.

“Over the last few years, we have seen a surge in the number of people embracing apartment living, especially in metro centres where significant lifestyle upgrades such as pools and gyms are on offer,” Ms Mitchell continued. 
 
“But while many Australians are happy with apartment living, the data continues to suggest others are only choosing apartments because they believe they can’t yet afford the traditional dream of a free-standing home.”

According to the research, Australians are also increasingly likely to consider moving to more affordable suburbs (89 per cent) or a smaller home (77 per cent).

Additionally, the research revealed that 31 per cent of Australians secured a property purchase by paying lenders mortgage insurance (LMI) and 5 per cent noted that they used a guarantor.

However, the use of a guarantor was more common among younger Australians, with 21.8 per cent of respondents aged 29 or under securing a home loan by using a guarantor.

“To put the challenge into perspective, today Australians need to save and sacrifice for many years to put down a deposit of $100,000 to secure a median-priced home valued at $556,384. Not to mention the additional costs typically associated with property purchase such as stamp duty and legal fees,” Ms Mitchell said.

More borrowers using mortgage brokers

The whitepaper also revealed that 28 per cent of Australians spoke to a mortgage broker before purchasing a home or investment property, up by 12 per cent from 16 per cent in 2017.

Younger Australians aged 25–45 were most likely to use a mortgage broker (44 per cent), up by 30 per cent from 2017.

Mortgage Choice and CoreData’s research follows on from Roy Morgan’s Single Source survey of more than 50,000 borrowers, which found that approximately 48.6 per cent of mortgagors who used a mortgage broker to obtain a home loan over the past five years were Millennials (defined as being born between 1976 and 1990), a larger share than any other generation.

The Roy Morgan data showed that more than a third (38.8 per cent) of borrowers who used mortgage brokers to obtain a loan over the past five years were from Generation X (born between 1961 and 1975).

When combined, the data showed that nearly 90 per cent (87.4 per cent) of mortgagors that had used a mortgage broker in the last five years were between 57 and 28 years old (i.e. Millennials and Generation X).

However, less than half of all Millennials (42.5 per cent) that had taken out a home loan in the last five years had said they went to a broker.

“In an increasingly complex lending environment, more home buyers are seeking the expertise of professional mortgage brokers first when they purchase a home or investment property, and this is likely to grow,” Ms Mitchell said.

[Related:  ‘Rentvesting’ stressful for home owners, study finds]