More stats confirm that it is getting harder for first home buyers
An analysis of house price and household income by Callam Pickering (a former RBA economist) has revealed that the gap has never been greater. In Pickering’s commentary, he went as far as saying it is almost ‘impossible’ for first home buyers to get into the property market, especially when you look at the 40% increase in Sydney house prices over the last few years, whilst interest rate returns have remained at approximately 3%p.a for first home savers.
— Callam Pickering (@CallamPickering) September 20, 2016
News.com.au asked FHBA Co-Founder Taj Singh to share his views on how he thought first home buyers were faring at the moment. He used the analysis conducted by FHBA in June 2016, which showed that first home buyers are borrowing more than 50% than they did a decade ago, despite inflation not even accounting for half of that increase. Taj Singh also added “In the early 1990s, buying a house in a big Australian city cost five times the average young Australian’s income. Now it’s about 15 times. The high cost of entry combined with low interest rates makes it harder than ever for first home buyers to get in.”
What are aspiring first home buyers doing to combat the challenges they face?
In Taj Singh’s comments, he provided some insight into what first home buyers are doing to get onto the property ladder. Some of these include:
- Rentvesting – More first home buyers are buying their first home as an investment whilst renting in their desired area. To view our New Homes of the week (Special Rentvesting Edition) released last week, please click here
- Moving Interstate – A greater proportion of Sydneysider’s are considering moving interstate or into regional areas. To view our selection of FHOG Eligible Homes in other states/regions, please click here
- Parental Assistance – Whilst not all young Australian’s can afford this luxury, there are various forms of parental assistance available (other than the traditional Cash Gift & Guarantee). To view these, please click here
- Savings – In this low interest rate environment, it is imperative for first home buyers to be maximising their returns on their savings. Compare the current bank accounts on offer here