The Changing Landscape for First Home Buyers in 2024: Navigating Challenges and Opportunities

It seems that the Australian dream of homeownership slipping away for first-home buyers.

For many Australians, the dream of homeownership is a symbol of stability and success.

But in 2024, that dream is becoming increasingly elusive for first-home buyers.

According to Canstar’s First Home Buyer Survey 2024, the average savings rate for first home buyers has plummeted to just $724 per month—less than half of what was saved in 2023.

With living costs soaring and property prices rising, the path to owning a home has never been more challenging.

Yet, in my mind, with the right strategies, it’s still achievable.

The savings shortfall: a snapshot of struggle

Canstar’s survey of 974 Australians saving for their first home reveals a stark reality: the monthly savings rate has dropped from $1,605 in 2023 and $1,417 in 2022 to just $724 this year.

At this rate, it could take an individual up to 10 years to save for a 10% deposit on a median-priced unit, assuming property prices increase by 3.49% annually.

This is nearly four years longer than if they were saving at 2023 levels.

The steep decline is largely due to rising costs of essentials.

According to the ABS, rents have climbed 6.7% annually, while insurance premiums have skyrocketed by 14%.

Even grocery prices have risen by 3.3%, leaving little room for savings.

Going solo: a tougher climb

Adding to the challenge, nearly half (48%) of first-home buyers plan to purchase alone, and 58% receive no financial assistance from family, such as rent-free living arrangements or guarantor loans.

While 71% intend to leverage government schemes like the Home Guarantee, the tight eligibility criteria and limited availability mean these options aren’t accessible to everyone.

Three pathways to ownership

Despite the daunting challenges, the Canstar report also suggested practical solutions for first-home buyers determined to enter the market:

1. Cut back on expenses

By shopping smarter, first-home buyers can potentially save an extra $310 per month.

Switching to supermarket-brand groceries, more affordable internet and mobile plans, and cancelling unnecessary subscriptions could shave years off the time needed to save for a deposit.

Combining these savings with the current $724 monthly average could reduce deposit-saving timelines from 10 years to around six years and five months.

2. Consider alternative financing

While government schemes like the First Home Guarantee can help buyers with small deposits, not everyone qualifies.

For those unable to access these programs, over 60 lenders now offer loans requiring just a 5% deposit.

However, buyers should be prepared for additional costs like lenders' mortgage insurance (LMI), which can run into tens of thousands of dollars, and potentially higher interest rates.

For example, purchasing a median-priced apartment with a 5% deposit could incur LMI costs of $26,678.

3. Reframe the goal

The preference for houses over units is strong, with 64% of surveyed buyers aiming to purchase a house.

Yet the median house price of $847,827 is over $200,000 higher than that of a unit, requiring 30% more in savings for the same deposit percentage.

Opting for a unit, considering properties further from the city, or even starting with an investment property could make homeownership more accessible.

Living rent-free while renting out the property could also help offset mortgage repayments and build equity.

Final thoughts

Despite the challenges, approximately 10,000 first-home buyers are entering the market each month.

Their success underscores the importance of adaptability and strategic planning.

Whether it’s adjusting spending habits, rethinking property preferences, or exploring alternative financing, there are still viable paths to homeownership.

And that's a good thing!

About Leanne Spring Leanne is a highly experienced Buyers Agent in the Brisbane Real Estate market. Leanne became a passionate lover of property in 2001. Since then, both professionally and personally, she has been involved in all aspects of property including purchasing, negotiating, renovating, and selling.