Housing affordability is no longer the main obstacle for Australian home buyers
The rising cost of living has overtaken housing affordability as the primary obstacle for potential home buyers in Australia, a new report from Lenders Mortgage Insurance (LMI) provider Helia has revealed.
According to the report, 54% of respondents identified cost-of-living as their biggest challenge, compared to 43% who pointed to housing affordability.
Helia’s 2024 Home Buyer Sentiment Report, which surveyed over 3,000 aspiring home buyers, highlights the increasing difficulty of saving for a 20% deposit. A significant 85% of respondents indicated that saving for a deposit has become more challenging.
In Sydney, it now takes an average of 14 years to save for a 20% deposit on a house, while in Melbourne and Brisbane, the timeframe is about nine years. For apartments, the average time to save a deposit is shorter, at eight years in Sydney and six years in Melbourne and Brisbane.
Despite these hurdles, optimism remains strong among prospective buyers. Seven in 10 believe that now is a good time to buy property, an increase from 63% in 2023 and 57% in 2022.
The report also points to a shift in how first-home buyers are receiving financial assistance from family. The so-called Bank of Mum and Dad is playing an increasing role in helping buyers enter the market, with 63% of first-home buyers receiving family support in 2024, up from 42% in 2023.
However, the nature of this support is changing. While parental assistance with deposits has declined from 60% in 2023 to 47% this year, there has been a 10% increase in parents helping with ongoing costs such as mortgage payments and strata fees, rising to 25%.
LMI is also becoming more popular as a strategy to help buyers secure property with less than a 20% deposit. The Helia report found that 77% of first-home buyers are considering LMI in 2024, up from 59% last year.
“With 84% of home buyers emphasising the importance of securing a home sooner rather than saving for a larger deposit, LMI offers a pathway to buy property earlier and avoid being outpaced by rising prices,” said Greg McAweeney (pictured above), chief commercial officer at Helia.
To achieve home ownership, many buyers are making sacrifices. Nearly a third (31%) of home buyers have taken on overtime work, and 23% have picked up second jobs. Many are also cutting back on non-essentials, such as takeaway food (48%), hobbies (41%), and subscription services (34%). Alarmingly, 21% are reducing spending on healthcare to save for a deposit.
With the costs of living on the rise, 25% of buyers are saving for three to five years, while 17% have been saving for over five years. This has prompted many first-home buyers to reconsider their options, with more buyers looking at outer suburbs (71%), interstate properties (40%), and smaller homes or apartments (64%).
This year’s report also introduces the Helia Home Buyer Sentiment Index, which tracks buyer confidence, urgency, and willingness to make sacrifices. In 2024, the index stands at 52, providing a snapshot of the challenges and sentiment of first-home buyers in today’s market.
“The Helia Home Buyer Index reveals how buyers are adjusting their expectations and exploring alternative pathways to home ownership,” McAweeney said. “Despite these challenges, there’s still a significant gap in understanding the home buying process.”
The report underscores the increasing reliance on mortgage brokers. Over half of respondents (56%) said they need help with research and decision-making, and 91% of first-home buyers indicated they are likely to use a mortgage broker to assess their financial situation, compare deals, and navigate the market.
“Research is a key part of the process, and mortgage brokers are essential in helping home buyers find the best options,” McAweeney said.
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