Sun. Dec 5th, 2021

It will take buyers 14 years to save the 20 percent deposit, but first-time home buyers Brianne Keogh and Angus Mills are not waiting.

Determined to break into the housing market sooner rather than later, the couple took drastic steps to come up with a deposit and compromised on the location and type of property they were looking for.

Melbourne-based first home buyer Brianne Keogh had to move in with her parents again and drastically cut spending to speed up her deposit. Arsineh Houspian

“We had to sacrifice a lot, including moving home with my parents and giving up vacations and going out on weekends to save faster,” Ms. Keogh said.

“We would buy closer to the city and get an existing home that we can renovate, but it would have taken us so much longer to save the deposit and we are not prepared to wait.

“So we decided to buy a house and land package in Doreen in Melbourne’s outer ring. It took us more than three years to drastically cut spending to save the 5 percent deposit we needed.”

ANZ senior economist Felicity Emmett said the pandemic and some public housing policies had exacerbated the situation.

“We are now in a situation where the gap between those who have already acquired home ownership and those who have not has really widened, and I think for many people they will never be able to build. bridge that gap, “said Mrs. Emmett. .

“This is a situation that has become more and more difficult over the last 20 years or so, and with the large increases in house prices over the last year, it is making housing very inaccessible.

“We already have cases in Sydney and probably also in Melbourne where key workers cannot find affordable housing near where they work.”

Ms Emmett said affordability could worsen further in the coming year as prices continue to rise, albeit at a slower pace.

“The main problem is that house prices have grown so much faster than incomes – now 12.5 times the average household income in Sydney,” she said.

“Even with a strong slowdown in growth, we will still see a 6 percent increase in house prices next year.

“It is unlikely that household incomes will rise as much as wage growth still holds in the low 2 per cent. [region]. So we really need house prices to grow at a slower pace than household income for an extended period of time to improve on some of these affordable measures. “

Eliza Owen, head of research at CoreLogic Australia, said that even with declining house price growth, affordability remained a challenge.

“If house prices go down, then affordability does not deteriorate so quickly, but even if property prices fall by 10 percent or 20 percent or something really dramatic, it does not make the big dent for people who have seen relatively low-income growth and whose employment has also been disrupted by COVID-19, ”she said.

“At the same time, when we start moving into the downturn, it’s likely to be due to higher interest rates. And then we’ll probably see a bigger jump in the part of the income required to service a mortgage, which will also worsen. affordability. “

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