New first homebuyer data provides hope to brokers

by Mackenzie McCarty05 Dec 2012

Following AFG reports of a slump in “lifeblood” first home buyer loan applications, new housing affordability stats may be just what the doctor ordered.

Bankwest and the Real Estate Institute of Australia (REIA)/Adelaide Bank have both released new data today, demonstrating an improvement in housing affordability across Australia.

According Bankwest's report, it now takes first time buyer couples an average of 3.8 years to save for a house deposit – down from 4.0 years in 2011.

At least 101,146 first time buyers entered the property market over the 2011/12 financial year – an increase of 14,644 over last year.

Bankwest retail chief executive, Vittoria Shortt, says it’s an “opportune” time for the nation’s first time buyers looking to enter the property market.

“House prices have levelled off and wages for the 25-34 year-old age bracket have risen considerably. This has brought Australia’s housing affordability back closer to 2007 levels, making it easier for first time buyers to get their foot on the property ladder.”

Adelaide Bank general manager, Damian Percy, says the number of first home buyers has continued to rise and that rental affordability has stabilised. 

"Compared to the September Quarter last year, we have now observed a 14.3% increase in new finance commitments to first home buyers, bringing this segment back up to almost 20% of all residential home buyers."

Percy notes that this is still a long way off the 30.8% level for first home buyers recorded in the June quarter of 2009, but says there are several factors that seem to be driving growth - including median weekly family income, which has also increased from the September Quarter in 2011 by around $250 per month. 

He says the current low interest rate environment is also encouraging many people to re-visit and weigh up the ‘buy vs rent’ equation quandry. 

Shortt says the upswing can further be linked to a general trend towards healthier savings habits in response to the GFC.

“There is a trend for people in their twenties and early thirties to stay at home with their parents to save money for a first time home deposit…It’s an effective savings method and young people are able to secure their first piece of real estate more quickly.”

Based on a 20% deposit for the median national house price ($423,000), Bankwest estimates that average first home buyers would need to save $77,600, compared to $80,500 in mid-2011.

All states and territories, according to the report, saw a decrease in the length of time required to save for a house deposit over the past year, with the exception of the Northern Territory where the time remained the same as in 2011 (4.3 years).

Tasmania remains the most affordable state in Australia, according to Bankwest's reprot, with the average couple taking 3.0 years to accumulate enough savings for their first property.

Darwin is the only capital city not to have experienced a drop in saving deposit times, while Hobart remains the most affordable, experiencing a drop from 3.9 years in 2011 down to 3.6. Melbourne and Brisbane have also seen savings times lessened – by about five months each.

Sydney remains the most difficult city for first time buyers, with an average of 5.7 years savings time. However, this number has remained stable compared to last year’s 5.8 year average.

Shortt says it remains challenging for first time buyers to purchase property in some capital cities, however, she says housing is significantly more affordable in regional areas – although this can mean buyers face an extended commute to work.

“It’s positive to see housing affordability for first time buyers has improved for the majority of Australia. The health of the first time buyer market often acts as a barometer for the strength of the property sector overall, suggesting the nation’s real estate markets may be primed for recovery.”

For the record, Australia’s most expensive area is Peppermint Grove, Perth, where it would take the average first time buyer couple 20.6 years to save a 20% deposit . The shortest average time required is in Central Darling, NSW and Dundas and Meekatharra in WA, where it would take couples 0.4 years.