Improved financial confidence sees more renters exploring pathways to homeownership
A growing number of Australian renters are channelling their financial frustrations into plans for homeownership, according to Great Southern Bank’s latest No Place Like Home report.
The research found that only 12% of long-term renters are satisfied with their financial situation, compared to 35% of homeowners. As a result, four in 10 aspiring buyers are aiming to purchase a home within the next three years.
The report highlighted that renters expressed dissatisfaction in nearly all housing-related categories, including stability, housing conditions, and the overall look and feel of their homes. The only area where renters matched homeowners in satisfaction was location.
Despite the ongoing cost-of-living crisis, Australians reported improved financial confidence compared to last year. Currently, 47% express concerns about their financial situation, down from 54% in 2023. Additionally, 32% of respondents said they feel more confident about managing housing costs in today’s economic environment, up from 30% last year.
Mat Patterson, head of broker at Great Southern Bank, noted that potential homebuyers appear to be adapting to current market conditions.
“This signals that people are continuing to find ways forward,” he said. “Brokers play a critical role in unlocking pathways to homeownership. From rentvesting to government schemes, lender’s mortgage insurance, or leveraging family support, brokers have been instrumental in helping more than 70% of Great Southern Bank’s customers find alternative routes to buying a home.”
Renters can bolster their loan applications by using rental payment histories as evidence of genuine savings. Great Southern Bank accepts a rental ledger showing six months of on-time payments alongside a 5% deposit.
“Not everyone can save a significant amount of money for a deposit,” Patterson said. “That’s why we support brokers by offering this option to renters.”
For first-home buyers ineligible for government schemes, Great Southern Bank offers a 15% discount on upfront LMI payments through its partnership with Helia.
The bank has seen a rise in first-home buyers leveraging government schemes to purchase homes in regional areas. From January to October 2023, over a third of first-home buyers using government incentives chose regional properties.
For example, former renter Kaleb Crossey (pictured above left) recently purchased his first home in Burnie, Tasmania, at age 27 with the help of broker Adrian Feltham (pictured above right). “Not having to rent anymore is a huge relief,” Crossey said. “Now I can have pets and renovate as I want. Renting always felt temporary, like I was throwing money away.”
Feltham, from Smart Mortgage Services Tasmania, said buyers are drawn to the affordability of regional markets. “In North West Tasmania, buyers can find a four-bedroom home with potential ocean views for under $500,000,” he said. “Many are realising they can own for the same cost as renting and are making the move.”
One in four renters said they would consider purchasing an investment property as their first step into the market, a trend known as “rentvesting.”
“Many of my clients can’t afford an $800,000 or $900,000 home but are looking to buy in more affordable regional hotspots while continuing to rent where they want to live,” Feltham said.
To support this trend, Great Southern Bank recently updated its policies for investors. The bank removed limits on the number of investment properties eligible for LMI and allows 90% of rental income to be considered in serviceability calculations when purchasing additional properties.
“Brokers are key to building relationships and having early conversations with potential buyers,” Patterson said. “This often allows buyers to purchase sooner than they thought possible.”
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