First home buyers are radically increasing savings to ‘get off the rental treadmill’.
Aussie first home buyers are so fed up with the ‘rental treadmill’ created by landlords in the past few years they’ve shredded the time taken to save home deposits despite cost of living pressures.
And the majority of those in Canstar’s new First Home Buyer Survey, released Thursday, (61 per cent) said they would save more if not for bills and household expenses.
Many FHBs were “radically reducing their spending”, purchasing an older property and choosing an apartment over a house to get off renting and buy their own home.
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Canstar editor-in-chief Effie Zahos.
Canstar Editor-at-Large and money commentator Effie Zahos said “nine in every ten potential first home buyers were prepared to make compromises to buy sooner”.
“First home buyers being able to save more in a cost of living crisis shows how determined Aussies are to get off the renting treadmill. Property prices are continuing to rise but rents are also rising to historic highs. Renters are no doubt feeling the pressure to get a foot on the property ladder.”
Many are asking for help from the Bank of Mum and Dad, for whom 29 per cent are receiving some form of support including cutting out rent completely – which is a barrier to saving for 49 per cent of FHBs.
The Canstar survey found parents were willing to let children stay rent free to save (8pc), help with their living costs (7pc), give a financial contribution to their deposit (7pc), go guarantor on their loan (5pc) and in 3pc of those surveyed mum and dad bought with them to get their child’s name on a property title.
“Parents are certainly preferring to offer assistance in ways that don’t require them to put their hands in their own pockets,” Ms Zahos said. “It’s far less risky to have your kids live at home rent-free to help them save for a deposit than to just give them a deposit or put your house on the line.”
The level of support from parents was higher this year (29pc) than last year (21pc), which helped 1,088 potential first home buyers save an average of $1,605 a month – up $188 or 13pc compared to the same time last year, and cutting the time taken to save a 20pc deposit by two years for singles.
Saving as a couple helps cut 10pc deposit saving time down to just over two years.
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A massive 89pc were stressed about their ability to build a large enough deposit, and while 62pc of potential FHBs were regularly saving, 13pc were not in a position to do so yet.
“In an economic crisis, not everyone is going to be in a position to save more, let alone build up enough for a deposit on a home,” Ms Zahos said. “Focusing on what you can realistically save and being flexible with your timeline can alleviate the pressure until your financial situation improves and you can boost your savings balance.”
The Canstar survey found a double income couple, each saving $1,605 per month could cut the time to save a 20pc deposit by almost a year – building a strong enough deposit in four years and two months, and down to just over two years for those looking at a 10pc deposit.
Most FHBs surveyed 51 per cent had a conservative budget in mind for their home of $600,000 or less, 28pc between $600,001 and $800,000 and only 21pc over $800,000.
Ms Zahos said there were ways to boost their budgets by making the most of any stamp duty concessions or first homebuyer grants and taking up the Government’s First Home Guarantee Scheme to buy with a 5pc deposit.
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