First Home Buyers Need Huge Savings
If you are a first-home buyer then you would need to put more into your bank savings account because deposits now are 10% more. National figures show that it will now take 4.5 years to save for a 20% deposit as compared to the 3.7 years figure in the past annual report. This means that Australians must be able to have $85,800 deposit for a house with a median price. Last year’s figure places it at $78,100.
In the more expensive parts of the country like in Perth, Sydney and Melbourne, the figures are higher. First-time buyers in these parts will have to save for a decade to be able to buy a house. There are 26 local government areas that require a huge sum of money for a house deposit, making it next to impossible for people to have their own house. Because of this, Australia is considered as one of the most expensive place to buy a house primarily due to a perennial undersupply of housing. In fact, a home in the United States will have a median price of only half of that of Australia’s $468,000.
The first challenge for first-time home buyers are not really the median price but the house deposit of $76,900, which translates to a 4 years period of saving up. There is now an increasing number of first-home buyers seemingly discriminated from owning their own property. Established owners with less stringent requirements are making it easier to buy a new property. This is indicative of the harsh reality of an influential Australian property sector. Many real estate companies and even banks are making sure of their profits by asking first timers to shell out a higher amount of cash. They do not want to take unnecessary risks especially when the demand for housing is high. They would rather prioritize established clients than newcomers.
There might be some small relief coming for home borrowers as the Reserve Bank is reluctant to increase interest rates and wants to maintain the status quo of 4.5%. The RB wants to focus on the debt worries of Europe rather than contend with domestic inflation.
A thriving property sector is likened to a double-edged sword. Studies show that it only benefits established home owners but punishing many of the children. Potential first home buyers will have to face longer periods of laboring in the rental market. It is such a shame that many Australians will not be able to enjoy the fruits of their labour as their money is spent on rentals instead of amortization for their homes. This is even aggravated by the fact that first home owner grants are based on pre-financial crisis levels and the prices of properties have considerably risen.
If you are newly working then you should begin setting aside a portion of your salary and put these in your bank savings account. If you are 25 years old, then you might be almost 30 when you buy your home. It is now longer to save for a house than finish a university degree. This is why it is important that the government must act to protect and encourage first home buyers by giving more grants on existing houses. It will be helpful to also reduce the stamp duty for first home buyers.
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