Could 2022 be the year that the deposit hurdle is broken for young people?

by Mike Wood05 Jan 2022

Housing affordability in Australia is likely to be one of the big talking points of 2022 in the broker channel.

For all that the housing market exploded in 2021, it only raised the barrier of entry for young people looking to get their first home, and the results of the census are likely to show that the homeownership rate is at its lowest since the 1940s.

For many young people, the price of housing isn’t actually the biggest issue: it’s getting a deposit together in the first place.

Coposit, a Sydney start-up, are looking to break that barrier down. Their product allows prospective buyers to make a $10,000 first instalment on a property and then pay off the deposit while their home is under construction – returning the first hurdle to one that buyer might be able to overcome.

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“People are now giving up on their homeownership dreams,” said Chris Ferris, CEO of Coposit. “I was fortunate enough to buy property in my early twenties, and I was able to do that because I knew about that the wealth that it would create later on in life.”

“People giving up on homeownership goals is difficult, and I would encourage them not to do that. I’d tell them to look at alternative ways to enter the market – built to rent style models as well as what we are doing at Coposit.

“My message is that we don’t want people to give up. It creates so many opportunities down the track if you’re able to crack into the property market. In five, ten or fifteen years time, it will create wealth.

“That’s why we’re seeing younger people moving into different asset classes: crypto, shares and the like. It’s because they’re finding it so difficult to get into property and then giving up on homeownership goals.

“We’re going to go a long way to creating a solution to that first barrier. Housing affordability is definitely an issue, but before people start considering affordability, they need to break down the first barrier of the deposit.

“That’s something that Coposit can provide a solution to. Rather than needing the big chunk of savings up front, we’re now breaking that down into smaller, more manageable pieces.

“Over the last 12-18 months, where the property market has moved between 20-40% in some locations, the deposit target has moved with it. It’s now very high in comparison to the market, and that’s something that Coposit can address.”