Home Insights Who are modern first-home buyers in Australia?

Who are modern first-home buyers in Australia?

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Most Australians are taking more and more time to enter their first home. So who is the first homebuyer who can now crack the market?

Data from the Australian Bureau of Statistics reveals some interesting facts about the first person of our time that may surprise you.

The face of the first Australian homebuyers today has changed a bit in the last few years.Photo: Getty


First-time buyers are still young … but old

The first home buyer is much younger than the switch buyer (the buyer who buys the second and subsequent homes).

More than half are between the ages of 25 and 34, which is the traditional age many expect Australians to buy their first property.

In contrast, switch buyers typically buy homes in their 30s, 40s, and 50s.

But the ABS data is One-third of the first homebuyers these days are over 35 years old. This shows that Australians are getting more and more difficult to get on the real estate ladder.

As a result, first-time buyers are older than before. A generation ago, the typical first homebuyer was in his mid-20s.

The rise in home prices, which has risen 350% in the capital since 1990, has made deposit savings quite annoying. It can now take years to surprise 20% of the purchase price of your first home.

First-time buyers do not have a small family or home size

Somewhat surprisingly, by the time the first homebuyer buys, they tend to have a family of similar size to other buyers – an average of 3.2 people.

And the homes they buy tend not to be that small.

Both the first buyer and the repeater buy an average 3-4 bedroom home.

The first homebuyer seems to have a higher income … but that’s not the perfect story

First-home buyers’ households report higher incomes than other buyers, which may be surprising.

More than half of first-timers are in the top two quintiles of disposable income. This reflects the financial resources needed to save on the first home deposit at the current price.

However, the comparison with other buyers is a bit deceptive.

The majority of switching buyers are retirees who are moving or dismissing. They are often low-income, which reduces distribution.

One-quarter of switch buyers are unemployed in their households. About 30% rely on government pensions or “other” income as their primary source of income.

These buyers are rich in assets but may have low incomes.

Soaring house prices make it difficult for many young people to deposit money.Photo: Getty


First-timers buy cheaper homes … and spend more of their income on homes

Reflecting the financial challenges of first-home buyers, they buy properties that cost 75% of other buyers on average.

For those who purchased in the three years prior to 2019/20, the average payment was just over $ 600,000.

That number has definitely increased over the last two years.

Meanwhile, switching buyers bought an average of $ 850,000 in properties over the same period.

According to an ABS survey, first-time buyers spend an average of 18% of their income on housing. This is much more than any other buyer, almost twice as much.

This further reinforces the reality that many first homebuyers are pushing the boundaries of affordability when riding the first tier of a home ladder.

The size and properties of the first home buyer’s family are no different from other household types.Photo: Getty


First-timers buy more from the city to enter the market

It is difficult for first home buyers to know where to buy.

However, data on participants in the First Home Loan Deposit Scheme provide some insight, though not necessarily representative due to purchase prices and income limits.

In expensive markets like Sydney and Melbourne, first-time homebuyers are far from the city center.

In Sydney, almost 60% of buyers were more than 30 km away from CBD, while in Melbourne, nearly half of buyers were more than 30 km away from the city.

In contrast, in cities such as Adelaide, Brisbane, and Hobart, many buyers using the First Home Loan Deposit Scheme could buy very close to the city.

Will it be easier for first home buyers?

Although the first homebuyers are old, their subsequent entry into the home market isn’t just about affordability.

More Australians are college-educated and are getting married and having children later in life. This may reflect changes in social norms, but it may also be due to the difficulty of buying the first home.

Many people still want to secure their homeownership before moving on to other big life milestones.

For first-time buyers, the situation may be somewhat relaxed. House prices are currently declining in most parts of the country. Low prices, to some extent, reduce the deposit burden faced by many.

New government policies targeting deposit burdens are welcomed. The first mortgage deposit scheme, now called the New Home Guarantee, allows 10,000 first homebuyers to buy with just 5% deposit without paying mortgage insurance.

In the proposed Help to Buy scheme, the federal government shares the purchase price of new buyers. This is up to 30% of existing homes and requires only 2% deposit. Many state governments have announced similar shared equity schemes.

But at the same time, higher interest rates are pushing up repayment costs. As we’ve seen, this isn’t welcome news for many, as the cost of housing for the first homebuyer is almost double that of other buyers.

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