“Saving up and living frugally won’t work to get you over the line”:First home buyers face a bleak outlook.Credit:Peter Rae
“It’s quite an ugly scene for first home buyers,” Aird said. “Even though prices have fallen,the reduction in borrowing capacity has been greater. It’s actually become a lot worse for first home buyers because the rise in serviceability makes it harder to get into the market in the first place.
“The only thing that’s gotten better is that the deposit required is a little bit less because house prices are down,but they still have more money going out each month on rent when they’re trying to save.”
Aird said election housing policies – the Coalition’s property tax option and Labor’s vow to increase the threshold for stamp duty exemptions and concessions – would reduce or remove the stamp duty hurdle,cutting the time to save. Mortgage serviceability would continue to be an issue while rates remained higher.
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First home buyers in western Sydney would take the shortest amount of time to save a 20 per cent deposit. It would still take five years and six months to save for an entry-level house in the Mount Druitt area,and two years and 10 months to purchase an entry-level unit in the Penrith area.
Mortgage broker Rob Lees,from Mortgage Choice Blaxland and Penrith,had seen a pullback in first home buyer demand,as interest rates climbed.
“We’re not getting as many right now ... a lot of that has to do with[mortgage] serviceability,” he said,noting some borrowers were now being assessed on their ability to handle a mortgage rate close to 9 per cent,given the 3 per cent serviceability buffer.
“That is really quite high and that’s the big issue,given generally ... first home buyers are just starting out[in their careers] and their salaries aren’t as big.”
“In some cases,parents have put money down to lower the loan amount so it actually meets serviceability requirements.”