Latest news with #firsthomebuyers
Daily Mail
11 hours ago
- Business
- Daily Mail
Why that home you could afford in 2018 is now a fantasy - with Aussies urged to buy now before it's too late
The average Aussie can no longer afford the typical big city house they could seven years ago after property price rises soared at triple the pace of wages. Record-low interest rates during Covid followed by record-high immigration levels have caused house prices to climb by double-digit figures in some years. Across Australia, prices have surged by 56 per cent since 2018 but in Brisbane, house values have soared by 86 per cent and almost doubled in Adelaide. By comparison, overall wages have increased by just 18.6 per cent - or a third the level of property price increases. Finder personal finance expert Sarah Megginson said entry level prices were only likely to keep soaring, despite the high levels of mortgage stress. 'Demand – especially in affordable markets – is expected to surge, which could potentially push entry-level prices even higher and squeeze first home buyers further,' she said. Back in 2018, Australia's middle home price covering houses and units stood at $532,327, CoreLogic data showed. With a 20 per cent deposit, the average, full-time worker earning $83,486 was at a pinch able to get a loan and borrow five times their salary before tax. Seven years later, Australia's median home price now stands at $831,288. Someone earning the new average, full-time salary of $102,742 with the equivalent deposit would now have to borrow 6.5 times their income - putting them in the severe mortgage stress territory. The banks are reluctant to lend a prospective borrower more than five times their pay, with the Reserve Bank's two rate cuts in 2025, so far, hardly undoing the 13 increases in 2022 and 2023. The 3.85 per cent cash rate is the lowest since June 2023 but is still a far cry from the Covid record low of 0.1 per cent. Lower interest rates increase borrowing capacity, but they also put up house prices. Sydney, Australia's most expensive property market with the biggest inflow of overseas migration, has seen its mid-point house price climb by 49 per cent since mid-2018, with prices rising from $998,270 to $1.486million. But in Brisbane, house prices have soared by a whopping 85.7 per cent from $538,693 to just over $1million in a city with a large influx of interstate migration. Record-low interest rates during Covid followed by record-high immigration levels caused house prices to climb by double-digit figures during some years (pictured is a Sydney auction) Perth prices have soared by 69 per cent from $481,612 to $813,810, in another city with strong population growth from other parts of Australia. Adelaide house prices have almost doubled, surging by 89.3 per cent from $465,992 to $882,157. Melbourne, however, is the exception to other major capital city markets with its mid-point house price climbing by just 15.6 per cent from $813,064 to $939,965. This was the only big capital city where house prices increased at a pace slower than wages growth. What if I'm single? Single Australians earning the average wage were able to buy the median-priced house in most capital cities, except Sydney and Melbourne, less than a decade ago. But that's dramatically changed with only working couples now having a chance in most capital city markets. A Finder analysis revealed South Australia has seen the biggest decline since 2017, going from having 85 per cent of suburbs being affordable for singles to 19 per cent. The ratio in Western Australia has fallen from 67 per cent to just 17 per cent. In Queensland, it's plunged from 66 per cent to 19 per cent. New South Wales, which was an overpriced market eight years ago, saw the proportion of affordable suburbs fall from 40 per cent to 11 per cent. Despite weak price growth in Melbourne, the proportion of affordable suburbs in Victoria had declined from 50 per cent to just 16 per cent. 'Buying a home is harder than ever, especially if you're trying to do it on your own without a partner or family member,' Ms Megginson said. 'First home buyers are not expecting to step into a mansion for their first property, but even those with realistic expectations are shocked that even entry-level homes carry eye-watering price tags.'
News.com.au
2 days ago
- Business
- News.com.au
Australian property market: impossible task for single buyers
Single buyers are being priced out of Australia's property market, with the average individual Australian only able to afford a house in a shocking 16 per cent of suburbs. While the financial advantages of being in a relationship is well-documented, being single now has a fresh blow as new research reveals it has become almost impossible to buy property by yourself across Australia. Comparison site Finder's First Home Buyer Report 2025 revealed that in 2017, an average Aussie could afford a mortgage for a median priced house in over half the country's suburbs. Now, that amount has fallen to only 16 per cent of suburbs across the nation. Even the unit market didn't offer much more hope for single buyers, who could now only afford to purchase in less than a third – 28 per cent – of Australian suburbs. This had fallen from two-thirds (66 per cent) in 2017. In NSW, SA and WA, the number of suburbs where the average single could afford mortgage repayments has fallen by around three-quarters. It was the worst in NSW, where single Aussies could afford the average house in 40 per cent of suburbs in 2017, that has fallen to just 11 per cent in 2025. South Australia had experienced a dramatic drop from 2017 where singles were able to afford the average house in 85 per cent of suburbs, dropping down to only 19 per cent in 2025. Housing affordability pressures have triggered a noticeable drop in the amount of single-buyers entering the market. In 2021, 45 per cent of first home buyers were individuals, that's now fallen to 39 per cent in 2025. Finder's personal finance expert Sarah Megginson said that buying a home is harder than it's ever been. 'Especially if you're trying to do it on your own without a partner or family member,' she added. 'First home buyers are not expecting to step into a mansion for their first property, but even those with realistic expectations are shocked that even entry-level homes carry eye-watering price tags. 'Saving a deposit is now a multi-year grind and many first-time buyers rely heavily on the 'bank of mum and dad' to bridge the gap between what they have and what they need. With up to three interest rate cuts predicted before Christmas, she said that will help current mortgage-holders ease some pressure, but could make things worse for those trying to enter the market. 'But demand – especially in affordable markets – is expected to surge, which could potentially push entry-level prices even higher and squeeze first home buyers further,' Ms Megginson said.
ABC News
2 days ago
- Business
- ABC News
Property prices tipped to hit record highs in 2025-26, bringing pain for buyers and a boom for sellers
Australian property prices are set to jump even higher in the coming year, which is more bad news for first-home hopefuls. But higher prices will help sellers boost profits from the sale of properties, as they capitalise on the current interest rate-cutting cycle. Two new reports released today reflect the interests of two very different groups of people in Australia. According to Domain's latest Price Forecast Report, Sydney and Melbourne prices will lead the charge in the next 12 months. The median house price in Sydney is forecast to jump by another 7 per cent in 2025-26, to a staggering $1.83 million by June 2026. It means the typical house price in Sydney will rise by $112,000, which is more than the average full-time worker earns before tax ($103,000). The median house price in Melbourne is tipped to rise by 6 per cent, after two years of downturns, to $1.1 million. Property prices in Brisbane, Adelaide and Perth, once hotspots for affordability, are showing signs of cooling, but not nearly enough to ease the pressure on first home buyers. Nicola Powell, Domain's chief of research and economics, says the forecast price rises will be a "reality check for many people." "If you're trying to break into the property market, the next year could be your toughest challenge yet," she warned. "While interest rate cuts and government support may offer some help, they're also likely to keep prices rising, especially in Sydney and Melbourne, where the market is more sensitive to rate changes. "Growth will slow compared to past cycles, but affordability is still a major barrier, with housing costs consuming a large portion of household income," she said. It will be a similar story for unit price growth. Domain said affordability constraints and first-home buyer incentives will likely push more buyers toward units, where prices are cheaper than the detached housing market, and unit prices will hit record highs in most capital cities. It says lower interest rates help to boost property prices because they improve the borrowing power of Australians. It says the Reserve Bank has already cut the cash rate by 50 basis points this year, and the market is pricing in an additional 80 basis points of cuts by mid-2026. However, it says strong housing demand could also ease a little over the next 12 months, because population growth is expected to slow down. The median unit price in Sydney is forecast to jump by 6 per cent in 2025-26 (up $53,000 in 12 months) to $889,000, which will be a record high. In Brisbane, the median unit price is tipped to jump by 5 per cent (up $31,000) to $701,000, also a record high. Similarly, Perth will see the median unit price jump 6 per cent (up $33,000) to $552,000, and Adelaide will see the median unit price rise by 3 per cent (up $18,000) to $586,000. Domain's report does not include property prices in Hobart. Meanwhile, Cotality (formerly CoreLogic) has released its latest Pain & Gain report, which views properties from the perspective of people who are interested in making a "profit." It analysed 86,000 resales in the March quarter and found 94.9 per cent of property resales "delivered a profit" for the sellers, with a median nominal gain of $305,000. That was down slightly from $310,000 in the previous quarter, marking the first financial quarter since March 2023 that median nominal gains have fallen. But Eliza Owen, Cotality's head of research, said the results reflected a housing market in transition, with profitability set to rise further after the RBA's February and May rate cuts, which have reignited demand and lifted values 1.3 per cent in the three months to May. "Although profitability held steady in early 2025, we're seeing clear signs of renewed momentum," Ms Owen said. "With rate reductions now flowing through to buyer demand and value growth, we expect stronger resale returns in the months ahead." Cotality's report says regional hotspots such as Noosa, Busselton, Grant, and the Sunshine Coast delivered some of the biggest profit uplifts in Australia in the March quarter. In those markets, median resale profits surpassed $400,000 in the quarter, "a staggering increase compared to five years ago." It says houses also continued to outperform units nationally in the March quarter, with 97.2 per cent of house resales delivering a profit, compared to 90.1 per cent of unit sales. "The difference in returns was striking over the March quarter, with the median gain on houses at $355,000, around 73 per cent higher than the $205,000 median gain for units," the report says. "Interestingly, despite the wide gap in gains, the median loss was nearly identical. The median loss was $45,000 for houses and $44,000 for units."
News.com.au
4 days ago
- Business
- News.com.au
Budget mistake puts half of home buyers at risk
Panicked first-home buyers are going for broke in the housing market, blowing their budgets to the point where they are in a dangerous financial position of having almost no savings. A new Finder report revealed almost half (47 per cent) of first-home buyers polled nationally went above their budget, up from 38 per cent in 2022, and many totally drained their savings in the process. It's a position that means they will be vulnerable to even the slightest money hiccup and interest rate change and would be financially devastated if their income were to decrease. 'Having a savings buffer is key to financial security, if these Aussies lose their jobs or are hit with an unexpected cost, they will be extremely vulnerable,' said Richard Whitten, Finder loans expert. He explained that first-home buyers rarely planned to empty their savings accounts and were often exceeding their budgets after facing enormous financial pressure. 'Aussies are being forced to take more financial risks,' Mr Whitten said. 'Most buyers plan to have some savings left over after the keys have changed hands, (but) with prices continuing to rise, this is no longer realistic.' Finder's First Home Buyer Report 2025 revealed the average first-time buyer who went over their budget spent about $63,000 more than they anticipated. One in 10 spent a whopping six figures more than they expected to, while one in five spent $50,000 more they had budgeted. The result of this spending was frightening: one in three of those who had bought their first home said they had less than $10,000 in savings. Half of the buyers in this category had zero savings left. Mr Whitten said first-home buyers who overstretched their finances to get into the market would pay a high price over the long term. 'Stretching beyond your means might get you the keys sooner, but it can lock you into years of financial strain,' he said. Pressure to spend more has coincided with incredible price rises over recent years, particularly during the Covid outbreak. PropTrack data showed house prices increased by about 70 per cent over five years in Brisbane, Adelaide and Perth. The increase in Sydney over the same period was about 50 per cent, while Melbourne had the smallest increase of a major capital at 15 per cent since 2020. 'As house prices surge, first-home buyers are increasingly forced to empty their savings just to enter the market,' Mr Whitten said. 'This leaves them financially stretched – and vulnerable to stress – right at the start of their home ownership journey.' First-home buyer fears may be contributing to their propensity to overspend. When Finder last surveyed first-home buyers in 2022, many cited the 'fear of missing out' as a key driver. A mix of peer pressure and concern that property prices would rise faster than wages prompted some to buy before they were priced out. Since then, property price anxiety has only grown. It was a common concern for 31 per cent of buyers in 2022, compared to 38 per cent today. Mr Whitten said a first-home was a risky target for overspending. 'The early years of the home buying journey are when buyers are most vulnerable. Their savings are gone and their repayments are mostly interest.' Mr Whitten added that Aussies should aim to buy within their means even if it meant delaying home ownership a few more years.
News.com.au
4 days ago
- Business
- News.com.au
How much average first-home buyer has in deposit and where they got the money
Scraping together a deposit has emerged as the biggest challenge for first-home buyers and more than half are not conquering that hurdle without parental help or working a second job. Alarming polling of first-home buyers across the country showed 52 per cent either received money from their parents, lived with them or got them to go guarantor on their loans. This cohort of buyers also included those who received an inheritance. Another 17 per cent of first-home buyers, or about one in six, said they put together a large enough deposit after working a second job. These figures dwarfed the numbers of first-home buyers who were getting into the market after meticulously saving or giving up on certain luxuries. Only 3 per cent of first-home buyer respondents to the nationally representative survey said they cut their gym membership to save money and 5 per cent stopped buying takeaway coffees. Nine per cent said they cut down on their online shopping habits. Sarah Megginson, personal finance expert at Finder, saving for a home deposit has become a marathon, not a sprint. 'Building a deposit is the largest hurdle for any Australian looking to get into the property market and it's only getting harder,' she said. 'Many buyers feel like they are forced to delay big life milestones like starting a family or moving out of home. 'Many need financial help from family, or they're giving up altogether on the idea of owning a home because it just seems so far out of reach.' Finder's First Home Buyer Report 2025 revealed the average first-home buyer deposit was at a record $135,589. This was more than a full year of the average person's wages and a 13 per cent on average deposit figures reported three years ago. It took the average first-time buyer almost five and a half years to put together that amount of cash, Finder revealed. About 11 per cent of first-home buyers took more than 10 years to get a deposit. These deposits were rarely the traditional 20 per cent, despite the lengthy time it took the buyers to pull them together, Ms Megginson said. 'The fear of missing out has driven many first home buyers to put down the smallest possible deposit of 5 per cent, and while it's great those opportunities exist, it can put a lot of pressure on the household budget when the mortgage is so high,' she said. Loans with deposits under 20 per cent usually carry higher interest rates and lenders often charge an extra fee called Lender's Mortgage Insurance (LMI) to cover the added risk. LMI alone adds an estimated $30,000 to the cost of the average house, although there are some government schemes open only to first home buyers, where they can get this cost waived. Close to 90 per cent of buyers polled by Finder said they believed it had become harder to save for a deposit in the last three years. And many regretted the end result 'Prices have been moving so fast and there's so much emotion involved when you're buying a home, which can lead you to make a rushed decision. So it's not surprising that almost half (45 per cent) of first home buyers who purchased a home in the past year, say they regret their decision.' The two most common regrets were paying too much for the home (26 per cent) and not saving a large enough deposit (11 per cent).
