- A lower price range is compromise number one for young buyers.
- The second compromise, for 40%, is buying with a non-romantic partner.
- Rentvesting is also proving popular to get on the property ladder.
New research has found young Australians are more eager than ever to get on the property ladder. With soaring inflation, interest rate rises, and the cost of living getting worse, the compromises they are willing to make will surprise you.
National Australia Bank (NAB) research has revealed the number one compromise Australians between 18 and 29 are willing to make in order to secure a property is dropping their price range.
The second compromise comes as a surprise: two out of five (40 per cent) young Australians are considering buying a property with someone other than a romantic partner.
NAB Executive, Home Ownership Andy Kerr said younger people are getting creative when it comes to making their property dreams come true.
“Younger Australians aren’t letting meeting a partner or getting married later in life hold them back from owning a home now. People are definitely looking at their options and casting the net wider when thinking about who they could buy with,” Kerr said.
“Rentvesting – purchasing in one location and then renting in another – is another trend that is creeping up in popularity,” said Kerr, with NAB data showing a third of young Australians choosing to buy and rent out a property initially. 20 per cent said they’re up for moving into a share house [while investing].
Compromises to get into the property market, by age
“Interestingly, our data shows that first home buyers aren’t being deterred from entering the property market, despite the market softening overall and the rising cost-of-living. Buyers are just thinking outside of the box to make it happen.”
Mr Kerr said regardless of who you were buying with it’s important that you talk about how you’ll jointly save for a deposit, agree on the property and meet ongoing costs.
“As buying a home is the biggest purchase most of us will make, it’s also worth considering getting a solicitor involved for additional comfort,” he said.
Market crash to favour first-time buyers?
That’s a tough call. While house prices certainly look to be hemorrhaging value like never before, and indeed reports found the collapse to be the largest since the GFC, it was noted by experts that prices still remained over $200,000 higher than the pandemic trough in mid-2020.
This heightened price is also happening against a backdrop of soaring inflation, rising interest rates, rising cost of living, a severe housing shortage, and little light on the horizon with the latest inflation figures leaving pundits expecting more interest rate rises as February turns the corner.
The price decline also seems to be losing steam, according to the latest Domain data, the report noted house prices across our capitals declined six times slower and unit prices three times slower than the previous September quarter.
Domain chief of research and economics, Dr Nicola Powell said, “Sellers had been sitting on the sidelines to see how the housing market downturn unraveled, and how high inflation and interest rates would land. The low flow of new homes coming on the market throughout spring and early summer has kept overall supply limited despite a drop in the number of sales. This tight supply is helping to keep prices stable.
“Now in the December quarter, the data suggests that the peak rate of the quarterly decline has passed as buyers have had time to adjust to the new norm of rising debt cost and reduced borrowing capacity.
“Based on calculations from Domain Home Loans, those with a $1 million mortgage are now paying almost $1,800 more on their loan than this time last year which has been a hard pill to swallow.
“While lingering weakness has persisted in the property market, the potential end of interest rates later this year will bring in more buyers and sellers, creating some green shoots for the months ahead. That doesn’t discount from an unsettled RBA environment and tight serviceability requirements which will take time for consumers to shake off” she said.
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The data comes from NAB Economics survey between November and December 2022.
