- One in five first home buyers took over a year to buy
- One in five Gen X took two years or more to buy their first home
- Generation Z were the quickest to buy
The stereotype that Millenials can’t afford a house because they’re spending too much on smashed avocado seems to no longer be relevant as the former delicacy is now fetching rock bottom prices – and farmers can’t seem to get rid of them, alas that phrase ends there and not with ‘quickly enough’.
So can Millenials afford houses, now that smashed avos on toast is now cheaper than a humble Vegemite sandwich?
Well…
Let us set the scene
In recent times, what’s been going on? A week ago, we found out from Domain that vacancy rates across Australia had dropped to 0.9% from 1%, with suburbs in Adelaide as low as 0.1%.
The average variable home loan rates is also now 4%, a level not seen since July 2019, and doesn’t take into account the cash rate rise.
On the matter of rate rises – the Reserve Bank of Australia (RBA) increased the cash rate on 2 August from 1.35% to 1.85%, a rise of 0.5%. The move came as the economy still grappled with high levels of inflation. On an annual basis, inflation is 6.1%, more than double the RBA’s target range of 2 to 3%.
We’ve also reported that one in three home buyers are blowing their budgets, 8% of first home buyers admitted that the price they paid exceeded their budget by more than $100,000. A further 8% paid between $50,000 and $100,000 over intended price, while only 20% of first home buyers successfully stayed below budget.
This comes amidst a time when the market is broadly believed to be cooling, with dwelling values moving downward last month. That also comes with its own challenges – buyers are still heady with pandemic property pandemonium, expecting wildly higher prices than what the market is actually commanding at present, or in plain English: buyer and seller expectations diverge.
Ah yes, and one in four are experiencing mortgage stress – defined as spending over 30% of your post-tax income on repayments.
That doesn’t sound good…
Quite! Stuck between a rock and a hard place, home buying is quite the quandary, lending itself nicely to some data from Finder‘s First Home Buyer Report which showed nearly one in five first home buyers take a year or more to buy a home. The exact figure is 18%.
Do people take longer? Absolutely. The survey results found that 8% of respondents said it takes two years or more to find the right place to call home.
Digging deeper, Finder said for generation X buyers, buying a house took two or more years for 17% of buyers.
The survey included 1,001 first home buyers in Australia, 372 of whom had already purchased their property.
Sarah Megginson, money expert at Finder, said the lack of housing supply in some areas has buyers competing fiercely with each other.
“The market is cooling and competition is easing off slightly, but it can still be daunting to go to inspections and auctions where you have several interested buyers.
“It’s a house, not a pair of pants – so you have to really make sure it fits before you sign.
“You’ll be stuck with it for a while, and you don’t want buyer’s remorse to sink in after it’s too late,” Megginson said.
The survey results also showed that 2 in five buyers or 39% took between three and six months for the home buying process, while just over a quarter (26%) spent three months or less on buying a home.
Which gender takes the most time to buy? The Finder survey found that women (22%) are considerably more likely than men (13%) to have spent more than a year on the homebuying process.
As for the quickest buyers, Gen Z took top spot, 30% taking 3 months or less, compared to 28% of millennials and 17% of Gen X.
