But young buyers need to modify expectations to achieve dream
Despite the rising cost of living and a run of interest rate rises, young Queensland borrowers are optimistic about buying their own home although they may have to modify their wish-list, say experts.
New research from RACQ Bank reveals nearly one in four young Queenslanders aged 18 to 34 plan to buy a home within the next 12 months.
The cost of the property, its location and size were the key factors influencing their buying decision, with 70% viewing cost as one of the top three factors when buying a home.
However, according to the survey findings from RACQ Quarterly Consumer Omnibus FY24 Q1, the outlook is not all positive, with one in three young Queenslanders unable to save for future goals and half admitting they had saved a little, but not enough.
Queensland broker Kate Sadler (pictured above left), the founder and director of The Broker Society, said there was a wide variety of factors influencing young homebuyers’ decisions.
According to Sadler, one of the key issues is their borrowing capacity which affects their ability to purchase the home they want, in the location they want.
Homeowners forced to widen search area, price range
Sadler, who was named one of Australia’s best mortgage brokers aged under 35 in Mortgage Professional Australia’s Rising Stars for 2023, said coupled with the bounce back in market conditions, first home buyers had started to look at purchasing in areas outside their original preferences and price range.
“I don't think being a younger person means that they need to lower their expectations or save more before home hunting,” Sadler said. “I believe every person deserves the right and opportunities to purchase a home, regardless of their age.”
“If young people can provide consistent employment and savings history and have managed to save their required deposit or have access to a guarantor and are credit worthy applicants, I feel that they should buy the home that is suitable for them if they are able to. “
Sadler said brokers considered a range of factors when working with clients, however said each circumstance was different.
“For example, a client with a much lower deposit (and hence more costs to purchase, such as LMI) might be paying rent whilst they save more.
“So, in some cases, having a lower deposit and not waiting to save more can be better off in the long run if they no longer need to pay rent to move into their new home.”
Bank of mum and dad not homeownership solution for most
According to Sadler, not everyone has access to the bank of mum and dad.
“From my own client base, the bank of mum and dad plays a small role in homeownership for young people.”
Sadler welcomed government initiatives to support young borrowers and negate the need for parents to take financial risks later in life.
Great Australian dream still goal for many
RACQ chief executive banking Michelle Winzer (pictured above right) said despite surging property prices, increased interest rates and the rising cost of living it was reassuring to hear many young buyers were still “striving for the great Australian dream” of owning a home.
“According to our research, 60% of Queenslanders aged 18 to 24 and one in three aged 25 to 34 are saving to purchase their first home,” Winzer said.
Concerningly, the research also revealed that more than two in five or 43% of Queenslanders said their mortgage or rent was the number one factor on their household budget.
“It is alarming to hear that 39% of Queenslanders say they feel very concerned about being able to afford their mortgage or rent in the next 12 months,” Winzer said. “If you have a mortgage, you could consider looking around for a more competitive interest rate to help reduce your repayments.”
The Queensland property market continues to prove attractive to a range of buyers following a report from CoreLogic earlier this year which showed southeast Queensland was appealing to investors thanks to its higher rental yields, lower buy-in prices and rapid population growth driven by both overseas and interstate migration.
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