This study of 1,000 Australians who plan to buy their first home in the next two years found 41% of first homebuyers will be aged 30-39 years, 39% will be 18-29 years of age, 14% will be 40-49 and 6% will be aged over 50 years.
Hence, the number of first home buyers aged 30 or more years has increased from 54% in the 2011 survey to 61%.
It takes longer to save
The average time spent saving has also increased, up from 1.8 years to two years, with respondents saving an average of 26 per cent of their monthly after-tax income for the purchase, the survey found.
“It is interesting to see more first home buyers are saving for longer and purchasing later in life, perhaps when they are in a better financial position, have researched their ideal location well and are keen to settle into a property they will call home for many years to come,” said Mortgage Choice spokesperson Belinda Williamson.
The survey saw a jump in the number of respondents who saw job security as their greatest concern, while fears over rising house prices and the impacts of interest rates dropped significantly.
The biggest barriers to entry for first home buyers were rising living costs (37 per cent), rising property prices (20 per cent) and the impact on savings of rising rental costs (13 per cent).
Job Security is a worry
Fears over job security have rocketed over the past year with almost one in five (18%) up-coming first homebuyers claiming this is their greatest concern, compared to just 11% last year.
Conversely, fewer buyers are concerned about rising house prices (22% this year compared to 31% in 2011) and even fewer are concerned about the impact of interest rates on their ability to purchase their first home (8% this year compared to 14% in 2011).
“While many of the economic indicators such as rate cuts, lower house prices and improved affordability might suggest now is a good time to buy, people are still nervous about their ability to sustain employment. Home ownership is still the dream for many Australians, however it is important to feel confident in your financial future before taking on the commitment of a property purchase,” said Ms Williamson.
Why buy a home?
The survey found that first home buyers’ property decisions are largely driven by lifestyle factors.
The greatest motivator for first time buyers was to set themselves up financially for the future by getting a foot in the property market door (57%) while almost half (49%) said they would like to purchase a property where they can raise their family.
The third largest motivation for first home buyers was to avoid rising rent, which is making owning a property more attractive (42%).
I understand why lifestyle choices and difficulty getting a foot on the property ladder means more people are leaving buying their first property till later.
This also means that many young Australians are leaving their wealth accumulation till later.
If you think about it, many Baby Boomers own their home outright – they’ve paid off their mortgage – and their home is now their biggest asset. In fact it’s the asset some have borrowed against to get into property investing. For others it will give them a level of security in their retirement.
On the other hand with more first home buyers not getting the power of real estate working for them till later in life, it will be harder for them to set themselves up financally.
Sure they’ve got more superannuation behind them than their parents did (because there was no compulsory superannuation when they were young), however everything I’ve read suggests the average worker will not be able to accumulate sufficient super for financial security.
In short, the old rules of wealth creation have not changed. Spend less than you earn, save and then invest the difference and then keep reinvesting until you have a sufficient asset base.