First home buyers in Australia are willing to splash out eye-watering sums on a home.
Finder’s First Home Buyer Report 2021 revealed that more than a third of first home buyers from New South Wales (35%) are willing to pay over $1 million for a home.
In comparison, just 17% of first home buyers in Victoria and 16% of those in Queensland were willing to shell out 7 figures on a property.
The survey 1,028 first home buyers found that the median budget for first home buyers is between $500,000 and $750,000.
This is occuring at a time when national house prices grew at their fastest pace in almost 18 years over the March quarter.
The national median rose by 5.7 per cent over the first three months of the year to reach a record of $899,509 – up 10 per cent on the same time last year.
The sharp rise marked the second consecutive quarter in which house prices had risen in every capital city – something that has not happened since 2009 after the global financial crisis.
Graham Cooke, head of consumer research at Finder, said that despite price inflation, first-time buyers haven’t given up on their dream of homeownership.
“The combination of rising land values, low interest rates and easy access to finance has caused an explosion in property prices, particularly in Sydney where the median house once again costs more than $1 million.
“This means it could take years for some buyers to scrape a deposit together, making it even harder to get their foot on the property ladder.”
Although more first home buyers from New South Wales are prepared to pay over $1 million compared to their Victorian and Queensland counterparts, their salaries are only marginally higher.
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ABS wage data from February 2021 shows that on average, NSW workers are the nation’s third-highest earners after those living in the ACT and Western Australia.
Annually, NSW workers earn around $91,099, which is $7,098 more than QLD employees, and $1,737 more than Victorian workers.
When it comes to cracking the million-dollar mark, men (31%) are nearly twice as likely as women (17%) to have a budget of more than $1,000,000.
Cooke said that saving for a deposit isn’t easy, but it can be done.
“There are plenty of online tools and calculators that can help you work out how much you need to buy a home, along with your borrowing power.
“From here, you can work out how much you need to save to be able to afford a deposit.
“Remember that the cost of borrowing may rise in the future, even if rates are low now.
“Banks can increase rates independent of the RBA – so make sure you can afford to pay a 1-2% higher interest rate if required,” Cooke said.
|Less than $250,000||9%||9%||6%||8%||15%|
Source: Finder First Home Buyer Report 2021,
survey of 1,028 first home buyers.
- Make use of government grants.
Government grants and stamp duty concessions available to first home buyers can take some of the stings out of purchasing your first property.
Some of these are conditional, depending on things like the age or value of the property so be sure to check your eligibility before factoring these into your budget.
- Move-in with family or into a share house.
If you have the option, moving back home with family can help you save on rent costs, freeing up more cash for your deposit.
Alternatively moving into a share house so you can split rent multiple ways will also afford you some big savings.
- Reassess your spending.
If you’re serious about saving for a deposit, a temporary reduction in luxury purchases is a great way to fast-track your savings.