The changing face of first home buyers

by Miklos Bolza06 Feb 2017
Researchers have found that in the past five years the number of first home buyers over 40 years old has significantly increased while the younger age brackets all experienced a decline.
The data, which was compiled by South Australian lender HomeStart Finance, looked at the lender’s finance data and examined the age of those who took out a loan from 2007 to 2015 (an average of 900 FHBs per year).
The lender found that the number of FHBs between 40 and 49 years old spiked by over 50% between 2011 and 2015 while those over 50 increased by more than 100%.
In the same time period, the number of FHBs between 18 and 29 dropped by over 50% while those aged between 30 and 39 decreased by 20%.
Looking at total percentages, the number of first home buyers over 40 increased from 18% in 2011 to more than 40% in 2015. This trend, if it continues, will see FHBs over 40 making up the majority within the decade.
“There’s been an ageing trend among first home buyers for many years driven by both lifestyle and housing market factors,” HomeStart CEO John Oliver said.
The most surprising result from the data was how quickly the age profile of a typical FHB has been rising. This shows that younger property buyers needed to be offered more support to break into the housing market.
While HomeStart is a South Australian lender, Oliver told Australian Broker that this trend will be exacerbated in states where property prices and rent are higher particularly in markets such as Sydney and Melbourne.
“The longer it takes for home buyers to save for the upfront costs, which is based on the price of the property as well as living costs, the later they will break into the market.”
Oliver pointed out that the median house price in Sydney in 2016 was $780,000, compared to Melbourne at $576,000 and Adelaide at $420,000.
This ageing trend amongst first home buyers could pose some risks for brokers and the property market in general, he said.
“An increase in the age of Australian first home buyers impacts on a ‘healthy home buyer cycle’. A healthy home buyer cycle has a good balance of first home buyers and ‘upgraders’, who transition from their first home to their next home within a few years.”
As the age of typical first home buyers increases into the 40s and 50s, this results in fewer ‘upgraders,’ he added, since older FHBs will be less likely to transition to a second or third property.
“In turn it means the client pool for brokers decreases, as there are less first home buyers coming through the door, as well as fewer ‘upgraders’ in the market.”
Brokers can help first home buyers enter the market earlier by offering up alternative lending options that work through barriers to home ownership such as the upfront costs required, he said.
Related stories:
“Move-up buyers” driving mortgage growth
FHBs increasingly locked out of property
State-backed lender bucks FHB trends