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First home buyers are looking for alternative measures to enter the property market in the midst of affordability constraints.
Despite the falling housing prices, it’s providing little relief for first home buyers (FHB) when combined with cost of living, interest rate pressures, and overall housing affordability, according to Helia’s First Home Buyer Report for 2022.
The report was based on a survey of 2,018 prospective FHBs and 1,187 recent FHBs across the country that examined their behaviours, attitudes, and outlook in regard to home ownership.
Affordability continues to be the top barrier for FHB when entering the property market, with 68 per cent of FHBs having held this viewpoint. Saving for a deposit was the second most common constraint (60 per cent) along with meeting living expenses.
Due to these constraints, the number of FHBs targeting a 20 per cent deposit decreased from 41 per cent of FHBs in 2019, to 25 per cent this year. During the same period, LMI usage with recent FHBs with less than a 20 per cent deposit rose from 36 per cent in 2019 to 71 per cent in 2022.
In addition, the report revealed a potential decline in family support available to FHBs, with 62 per cent of FHBs being offered assistance from family or parents while only 43 per cent of potential FHBs are expecting the same.
Furthermore, the report indicated that the number of FHBs who think now is a good time to buy fell from 67 per cent to 57 per cent year-on-year.
This research has shown that alternative measures to saving for a deposit, purchasing property with less money or shared property ownership are expected to rise.
Although according to recent FHBs, the use of the First Home Super Saver Scheme (11 per cent), rentvesting (8 per cent), and shared equity schemes (6 per cent) remain relatively low. However, significantly more potential FHBs said they’d likely consider these and other strategies.
Almost three-quarters (74 per cent) of those aware and understand the strategy said they would consider a deposit gap loan, followed by those who said the same for the First Home Buyer Scheme (63 per cent).
Of those unaware but had the strategies explained to them, 63 per cent agreed that they would consider the First Home Super Saver Scheme and 55 per cent said the same about rent-to-own.
Helia chief executive, Pauline Blight-Johnston, said: “LMI is being increasingly used as a strategic tool to help many Australians enter the property market sooner.
“Given many FHBs are motivated by the long-term financial benefits of home ownership and are keen to avoid rising rental costs, we expect to see more emerging strategies and pathways being considered by the new generation of home buyers.”
[RELATED: ‘Key efficiencies missing from FHBC policy: CoreLogic]
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