The changing face of first home buyers

Written by in First Home Buyers on October 3, 2014

The changing face of first home buyers

The definition of a first home owner in Australia is not what it once was. Faced with rising house prices and cuts to First Home Buyer Grants, today we’re witnessing a fundamental shift to the first home buyer market.

According to our latest research – First Home Market Report, a national survey of 1,086 Australians – the majority of first home buyers and owners (57.1% and 54.1% respectively) today are in their 30s and 40s. In contrast, just a quarter of first home buyers (25.7%) and one in ten first home owners (10.7%) are under 30.

In another sign that Australians today are taking longer to enter the market, a further 50.7% of first home buyers and 60.9% of first home owners have children. We’re witnessing the typical order of home ownership followed by kids being flipped on its head.

So why are first homebuyers today older?

Unsurprisingly, it’s affordability that is locking out a generation of younger buyers. Our research reveals that current house prices are playing a significant role in driving up the average age of first timers. Specifically:

  • Over a third (35.7%) have not bought because they think house prices are too high
  • A further 30.3% want to save a bigger deposit – the next highest motivator for not entering the market
  • One in 10 question whether now is the right time to buy

First homebuyers bunkering down

However, in spite of affordability pressures, our research also revealed that Australia’s first homebuyers are prepared to make significant lifestyle changes in order to save a deposit.

Despite perceptions that younger generations today are of a different mindset to their parents – accustomed to travel, flexibility and choice in their careers – 53.1% of first homebuyers are cutting back on discretionary items, a further 47.3% are limiting social outings and more than a third (38.5%) are forgoing holidays.

Interestingly, first time buyers under 30 are even more willing to make lifestyle sacrifices in order to save a deposit (60.1% are cutting back on social outings, 52.7% on discretionary items, 50.9% holding off on big ticket items and 41.6% forgoing holidays).

Affordability drives the rise of the property ‘shunner’

While it’s encouraging to see so many first timers with the right attitude towards saving and getting their foot on the property ladder, it appears affordability is creating a sub-group of property ‘shunners’.

Around a quarter of respondents (24.1%) are going against the grain and have made the decision not to buy property.

Among property ‘shunners’, home ownership rated much lower as a measure of success in adulthood compared with first home buyers and owners. Non-buyers rated owning a home third, behind having a family and travel/experiences, and just ahead of having a successful career and starting their own business. In contrast, first-timers ranked home ownership as the highest measure of success in adulthood, ahead of having a family, a successful career, travelling and owning a successful business.

Interestingly, over a third are shunning home ownership to allow for financial and lifestyle flexibility: 21.0% don’t want to be tied down by a mortgage and plan to spend their savings elsewhere, while 17.5% are avoiding buying to ensure a flexible lifestyle. Of those spending their savings elsewhere, 79.4% said they would be spending their money on holidays, and over a quarter (26.4%) would spend on discretionary items like clothing.

However, affordability is by far the main reason stopping people from buying a home (61.8% gave this as their main reason), while 15.1% refuse to buy because they can’t afford their ideal location.

So what do you need to do if you’re looking to buy?

If you’re not part of the small sub-group who are choosing not to buy and instead live the ‘high life’, then it’s worth considering the following tactics for getting into the market:

  • Rent and buy an investment property: If you have your heart set on living in your preferred suburb, consider renting and buying an investment property in a more affordable area. Not only will you benefit from rental income offsets, you will also have smaller mortgage commitments.
  • Set a savings plan, and stick to it: There is no other way to get on the property ladder than to knuckle down and save. One of the most effective ways of saving is to transfer a percentage of your salary to your savings account each month and pretend it doesn’t exist. Whether that’s 5-10% (or 20-30% if you’re feeling ambitious), the key is to commit to a realistic savings goal.
  • Do your research: The property market is always changing so keep an eye on property prices in the areas you want to buy, go to auctions or read property prices in the newspaper or on property data websites such as Property Data Online. From there, you can work out just how much you need to save for a deposit – and if you can afford it.
  • Adjust your expectations: If you’ve realised you can’t afford to buy in the area where you want to live – and don’t want to consider the renting and investment property option – then adjusting your expectations might be the next best thing. Remember that your first home isn’t necessarily going to be the property you live in forever, so moving to a more affordable area in the short term can be a great way to set you up for the future and buy in your ideal suburb.


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