Rising property prices are seeing first home buyers have to scrimp and save for longer, however it has also made them more savvy when they finally do.
According to Mortgage Choice’s latest First Home Owner survey, one in four first home buyers said they had to save for “more than five years” before buying their first property. By comparison, research conducted by Mortgage Choice in 2011 found that first home buyers “saved for less than two years” before entering the property market.
Mortgage Choice spokesperson, Jessica Darnbrough said that the surging house prices have also affected where they are buying their first homes.
“The First Home Owner survey found almost 40% of first time buyers couldn’t purchase exactly where they wanted to. Of those buyers, 88.2% said it was the rising property prices that had stopped them from purchasing in their ideal area,” she said.
But while rising property prices are keeping first home buyers out of the property market and out of their ideal area for longer, Darnbrough says it has also made them smarter about their property purchase.
“Looking at the data, 36.9% of first time buyers said their mortgage repayments accounted for less than 25% of their after tax income. Meanwhile, in 2011, just 24.4% of first home owners said their mortgage repayments were less than 25% of their after tax income.
“They are determined to not outspend their means and will make sure they are in a position where they can comfortably afford their mortgage repayments before buying,” she said.