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First home buyers are struggling to enter the market but are keeping their mortgage repayments under control, according to new research.
A Mortgage Choice survey of more than 1,000 first-time buyers who had purchased within the last two years found that 26.5 per cent of respondents saved for more than five years.
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Another 17.8 per cent saved for three to five years, 15.6 per cent saved for two to three years, 21.1 per cent saved for one to two years and 19 per cent saved for less than 12 months.
The survey also found that 63.1 per cent of first home buyers were able to buy in the suburb they wanted.
Of those who weren’t, 88.2 per cent said it was because their targeted area was too expensive.
According to the survey, 21.3 per cent of respondents had to spend up to 20 per cent of their after-tax income on their mortgage repayment.
Another 29.4 per cent spend 21–30 per cent of their after-tax income on their mortgage, 23.5 per cent spend 31–40 per cent and 25.8 per cent spend more than 40 per cent.
Mortgage Choice spokesperson Jessica Darnbrough said it isn’t surprising to see first home buyers saving for longer given the rise in property prices.
However, she also noted an apparent fall in mortgage stress, with 36.9 per cent of new buyers spending less than a quarter of their after-tax income on mortgage repayments compared to 24.4 per cent in 2011.
“So while rising property prices mean first home buyers are required to save for their first home for longer, it is clear these buyers are also incredibly savvy,” she said.
“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.”
[Related: Mortgage Choice posts record result]
