FIRST HOME BUYERS ARE INCREASINGLY SEEKING FAMILY SUPPORT TO PURCHASE THEIR FIRST PROPERTY
According to the latest RP Data-Rismark Index, Perth apartment values rose by a significant 5.3 per cent in the space of a month to a median of $420,000. This price gain for March was more than seven times the 0.7 per cent gain recorded across all capital cities in all the detached houses and units market.
UDIA’s Policy Liaison Officer became a First Home Buyer (FHB) during March and is now proud owner of 50sqm of space. He recently recounted the factors that led him to purchase a small dwelling; this is his story.
“Property prices, income and living expenses are the most obvious factors that influence our ability to purchase property for the first time. When I initially sat down with a mortgage broker and subtracted my expenses from my income I realised that I could afford a property but that it would take me upwards of 5 years to be able to save the required deposit.
It’s interesting to note that more than half of all first home buyers in Australia seek family support to purchase their first property. This support can be financial or simply letting their kids live at home until they have saved a deposit. Twenty six percent of all first home buyers are either living with their parents or other family members up until they purchase their first home; I am no exception to this.
Since 2009, banks have increased their deposit requirements and this has created challenges for those entering the market. Having a family member sign on as guarantor for a first home buyer avoids the need to save a large deposit and also cuts out the one-off mortgage insurance fee. Without my parents supporting me in this way I would not been able to purchase a property.
Apartment living is a changing notion in Western Australia, with FHBs realising that a smaller dwelling is often suited to their circumstances and income. I chose my apartment based on its close proximity to public transport, services and entertainment.”
Alex’s experience is reflective of many FHBs. Last month’s Genworth Homebuyer Confidence Index showed that from 2010 – 2013 only 52 per cent of first home buyers had a deposit of over 10 per cent of the value of their property at the time of purchase. Parents and extended family are often filling this gap to help young buyers enter the market, as my parents did when I bought my first house over thirty years ago.