Since every state is becoming more and more expensive, homebuyers are required to rethink their savings. Now, the main question is, “How much do they actually need to buy their first home?” Research says that now first-homebuyers need more earnings to buy their first home.
Currently, the normal full-time wage is $103,024, through which homebuyers could borrow $425,000. This means if one saves for a 20% deposit, their budget to buy in an auction should be $531,250. However, if savings are less than that, they may face financial hardships. That means buying a first home requires far more savings than most full-time incomes can comfortably support, especially in major cities.
Median Prices Today
The housing market is becoming more and more expensive, with high median prices.
- Sydney: $1,700,000
- Melbourne: $1,035,000
- Brisbane: $1,022,000
- Perth: $917,000
The situation shows how challenging it has become to buy a first home in these capital cities. Back 30 years ago, the average buyer could think of buying their first home with an average income. However, over time, major shifts happened in the market, and now the prices are peaking to great heights.
What Does This Reflect, Then?
More housing demand and less supply are the driving factors of the market this time. As a result, interest rates rose, making it hard for first homebuyers to afford a home. Research indicates that currently, even with a median income, homebuyers require significant planning and financial resources to purchase their first home.
If the couple’s borrowing capacity is $800k, then only a dual-income household can borrow around $1,099,000. This signals that, at present, the following policies and measures could only help,
5% Deposit Scheme
According to current policies, first-homebuyers can use the 5% deposit scheme. Initially, the scheme aimed to ensure the purchase of a modest home. However, with its expansion to include all first-homebuyers, it has the potential to address broader housing issues.
Following the trend, research confirms that it’ll be a favourable step towards more homes, but prices will rise too. Additionally, it promises to deliver an extra 100,000 homes, but at a high cost of living. This suggests that the policy may cause a significant market imbalance.
So, is there any other way?
Construction of More Houses
There is a need for a greater housing supply by constructing more houses. This is currently a safer way to help first-home buyers. However, the first-home buyers can even rely on schemes like the first-home owner grant, the first-home guarantee scheme, and stamp duty exemptions.
Additionally, first-home buyers can even take advantage of the rentvesting investment strategy. This strategy involves buying a home at an affordable cost in regional areas and renting it out. The outcome will potentially improve their investment portfolio without compromising their savings.
Final Thoughts
This is now a major concern that first-homebuyers need more savings to buy their first home than before. While rising prices present challenges, government initiatives like the First Home Guarantee Scheme, 5% deposit schemes, and stamp duty concessions can offer some support. However, success will depend on having an effective plan while comparing all the available options.
Make informed decisions to buy your first home.
Contact Nfinity Financials, or book a consultation call at 1300 GET LOAN, 0456 456 267.
