Single first home buyers face distant property dream

We all know that buying a home is becoming increasingly more difficult; however, for one buyer type this is now almost impossible.

First home buyers, particularly younger singles looking to go it alone and get a foothold on the property ladder are facing the harsh reality that homeownership could really be just a distant dream.

With property prices continuing to rise, and the gap between wages growth and property growth widening, it’s no wonder why the length of time it takes to save up a deposit is increasing, with buyers constantly playing catch up, especially the later you leave it.

According to a 2016 Bankwest report, the average Australian couple spent 4.4 years saving up a 20 per cent deposit to buy a median-priced house in 2016. However, for Victoria, this timeframe dramatically rose to 6.2 years, whilst in Sydney, the length of time it took a couple to save was a massive 8.4 years!

In comparison, the capital city with the shortest wait, Hobart, still saw the average couple spend 3.8 years saving for a 20 per cent deposit.

So if it takes approximately 4.4 years for a couple to save a 20 per cent deposit, what chance does a single buyer have? By the time a single buyer has their 20 per cent deposit, property prices would have gone through a full cycle, and buyers are likely to see property prices double, leaving them out of reach yet again.

Data from the non-major bank ME, shows that the number of single home loan applications with them fell by 9 per cent to 35 per cent of all loans in the past two years.

The data also shows, unsurprisingly that the average loan size for single-mortgage applications increased by 9 per cent to $355,000. NSW saw the greatest increase, rising by 16 per cent to $422,000, whilst Victorian singles saw an increase of 11 per cent to $348,000.

Buying a property as a single is bad enough, but if you are female then you are also “significantly worse off” than men. Single female loan applications fell by 14 per cent, compared to just a 5 per cent fall for single men.

So if you are a single first home buyer then what can you do about it?

Buying a property as a single is a real struggle, but there are ways around this if you seriously want to get a foothold on the property market. Here are seven things you can do:
  1. Start saving as soon as possible – The earlier you start saving, the better chance you have to own a property. Try to cut back on heavy expenses such as nights out and expensive holidays, and concentrate on making every dollar work as hard as possible for you. You might be entitled to a pay rise, or it might be time to get a better paying job. You should also look at paying off any bad debt such as car loans, as this will eat away at your savings, and won’t look good when it comes to applying for a mortgage.
  2. Become a rentvestor – In an ever changing world, rentvesting is one popular method for first home buyers to get a property under their belt. If you want to continue to live where you want, and still buy a property then this option could be for you. Rentvestors rent where they want, but buy in a high growth suburb. This could mean investing interstate where it is more affordable and growth is expected, such as in Brisbane. This allows you to rent out your property and gain some equity in order to purchase your next property.
  3. Narrow your expectations – If you have been considering a two-bedroom apartment, then you might want to start with something smaller, just to get yourself on the property market. You can also try to look further afield and buy in an area that is much more affordable.
  4. Buy off the plan - Rather than buying an established property and going up against much fiercer competition at auctions, buying property off the plan can offer you another and easier way in. With just a 10% deposit generally required, and nothing else needed until settlement, you can use this timeframe to continue saving up a larger deposit and get some money behind you before you start paying a mortgage. Off the plan also provides you with more choice of properties at entry level price, and eligible first home buyers can claim the first home owner grant and stamp duty concessions too, as well as sometimes benefiting from developer incentives.
  5. Team up – Buying property on your own is extremely hard, so why not buy with your partner, friend or family member? Splitting the costs makes property ownership much more feasible, and remember this doesn’t have to be your home forever. Use this as a stepping stone to get to where you want.
  6. Ask your parents for help – Does your parents own their own home? If so, you could always ask if they can be guarantors for you and use the equity within their property as the deposit. You can then purchase a property comfortably within your budget without having to pay a deposit, and simply pay down the mortgage over time to release your parents from this contract.
  7. Speak to iBuyNew – At iBuyNew, our friendly Property Consultants have years of experience within the property market and can assist you with finding the right property, to suit you. We can help you figure out your goals, expectations and help build a plan on how to get you there sooner.

Things to Remember

Although there is the property price and the cost of the mortgage you need to think about, there are also plenty of other costs you need to bear in mind to ensure that you can afford the property in the first place. Things like, removal costs, furniture costs, utility bills, and insurance will all add up, particularly if you are living alone so you need to ensure that the property does not leave you struggling to survive.

It’s therefore best to plan ahead and speak to a reputable Mortgage Broker who can go through your finances and work out a budget that can work for you, especially if interest rates do rise.

You don’t want to be in a position where you are in financial stress.

To learn more about how iBuyNew can help you get on the property market sooner and what strategies could help you, why not get in touch with one of our expert Property Consultants today. Call us on 1300 123 463.
Published on 25th of January 2017 by Marty Stanowich
Marty Stanowich
Marty Stanowich


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