Pets, not family, a top priority for first home buyers

Don’t tell your mother. When it comes to a space to call your own, first home buyers are prioritising space for their pets over proximity to family, according to new research from Commonwealth Bank of Australia. 

Two in five (38%) respondents ranked space for a pet as a higher priority when choosing a home, with under a quarter (23%) putting proximity to family as their preference. 

And in a time that is being called the “toughest since the 1990s” for mortgage affordability, it seems only fair that first home buyers are making sacrifices, and determining what they really need, when trying to get a foot on the property ladder.  

Top priorities for first home buyers

The survey from CommBank explores the top priorities for first home buyers when considering purchasing property. These were the non-negotiables for first home buyers:

1. Property price being within budget – 69%
2. Location of the property – 57%
3. Type of property 52%
4. Size of the property – 41%
5. Space for a pet – 38%
6. Proximity to family – 23%

Interestingly, the research also explored what first home buyers were willing to give up to cut down the incredible time it takes to save for a property deposit. The most popular response was to skip social outings, with over eight in 10 (81%) willing to ditch nights out and dates for a home deposit. 

Non-essentials are also understandably on the chopping block, with more than three quarters (79%) of first home buyers prepared to cut back to save a deposit quicker. Meanwhile, 71% of respondents would consider following a more strict budget, 58% said they will utilise government schemes, and only 9% would consider buying with a friend to ease the cost burden. 

CommBank’s Executive General Manager Home Buying, Michael Baumann, said: “This desire to enter the property market also means that first home buyers are prepared to be realistic. We found that close to nine in 10 are willing to compromise on their wish list in order to purchase a home sooner.”

“We know that saving for a deposit can be one of the biggest hurdles for first home buyers. However, there are opportunities for first home buyers to enter the property market sooner,” he said.

“In particular, schemes like the Government’s Home Guarantee Scheme, which comprises the First Home Guarantee, the Family Home Guarantee and the Regional First Home Buyer Guarantee, can enable first home buyers to secure their first home sooner and invest in their futures,” Dr Baumann said.

Toughest mortgage affordability conditions since the ‘90s

If you’re a first home buyer struggling to save up a deposit, you’re not alone. In fact, the current environment of mortgage affordability is being referred to as the “toughest since the 1990s”.  

Today, the national house price is 6.2 times the average after-tax annual household income, according to BetaShares modelling. This is compared to 3.1 times the average household income in the 1990s, when many homeowners claim it was the hardest time to be a property owner.

BetaShares chief economist David Bassanese said: “The house price declines have not improved affordability because it has been more than offset by interest rates... [Mortgage affordability is] now worse than the GFC. 

“Yes, mortgage rates are a lot lower today but property prices relative to income are a lot higher. People trying to buy today are facing close to the worst conditions we’ve seen in 30 years,” Bassanese said. 

It’s safe to say that it’s an extremely challenging time to save for a home – particularly in major cities like Sydney and Melbourne.

Getting a foot on the property ladder

The latest CommBank survey shows that first home buyers are setting their priorities and being strict about what it takes to get a foot on the property ladder. Here are some additional tips worth considering if you’re saving up for a deposit:

• Understand your budget – Knowing how much you can afford to borrow is crucial when it comes to setting your budget. Use RateCity’s Borrowing Power Calculator for an estimate of how much you may be eligible to borrow, based on your income, expenses and other factors.
• Know your borrowing power can change – In a fluctuating rate environment, if interest rates rise, the amount you may be approved to borrow could decrease. It’s important to follow the market and keep on top of your changing borrowing power, as it will impact the home you can afford to buy.
• Consider bridesmaid suburbs – You don’t have to buy into your dream suburb for your first home. In fact, it may be more affordable to look at “bridesmaids” suburbs – appealing areas nearby to your dream suburb. Be aware that you may make some concessions in terms of access to transport or green spaces.  

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