Here at iBuildNew we are constantly reviewing and researching the best ways to help Australians who are looking to build or buy a new home. And with the federal budget underfoot, which is set to be centred around housing affordability, we thought it was time to find out exactly what Australians think about this issue. So we have gone to market and surveyed over 1000 Australians, of which 216 were first home buyers looking to enter the local property market. The results are astounding and give us all great insight into the plight of the Australian first home buyer.
Our housing affordability report reveals the majority (63 per cent) of Australian first home buyers (FHBs) believe an affordable house costs less than $450,000, and for 85 per cent of FHBs, it means less than $600,000. This is in stark contrast to median house prices in Melbourne and Sydney, coming in at $844,000 and $1,152,000 respectively, revealing it’s highly unlikely FHBs looking to buy in Melbourne and Sydney are in a position to afford their dream home. This topic is reinforced through the finding that 64 per cent of first home buyers are only prepared to look at properties within their suburb of choice or surrounding suburbs, which means they are not even considering the outer suburbs or regional areas. New house and land packages are within their definition of affordability; these tend to only be available in the outer suburbs so are being overlooked by buyers.
“Housing affordability has become a significant issue over recent years, driven by exponential growth in median house prices and relatively low levels of wage growth”, said Daniel Peterson, CEO at iBuildNew. “While being the most popular cities in which to own a home, Sydney and Melbourne clearly face the most stress when it comes to housing affordability given the lack of new supply to meet growing demand. In addition to this, the growth seen in median housing prices is pushing first home ownership out of reach for many.”
Only 22 per cent of first home buyers are considering a new build when securing their first home, with the majority (60 per cent) focused on buying an established home or townhouse. Given a new built house and land package can be secured at around 40 per cent less than established median house prices, an opportunity exists for many buyers to think more broadly about alternative ways to enter the property market. Finance is the biggest barrier for over three quarters (76 per cent) of FHBs locked out of the property market because they either can’t save for a deposit or secure a loan, or they don’t have stable employment or income.
“The economic benefit of buying new is not well understood by first home buyers, with real estate agents doing their best to overcomplicate building a new home to retain demand for established homes. The reality is building new doesn’t need to be difficult, and the economics for a first home buyer are really compelling,” Peterson added.
In response to the political discourse around accessing superannuation for house deposits, 55 per cent of respondents did not think it wasa good incentive that will help them secure their first home. This likely reflects a combination of lack of confidence the proposal will be legislated, a lack of understanding around the proposal, and perhaps the reality that many FHBs have relatively small super balances. First home buyer grants were ranked most wanted by the majority (72 per cent) of respondents as the most effective incentive from the government for getting into the housing market.
“First home buyers grants are simple and well understood, whereas new schemes such as access to super or a shared equity scheme are complicated and diminish longer term value and benefits for home buyers,” continued Peterson. “Creating incentives for first home buyers to buy a new home in outer suburbs or even regional areas, as recently announced by the Victorian state government, are terrific initiatives. Not only do they help get more people into their first home, they also drive demand away from existing properties, mainly in the inner suburbs, which over time will help alleviate pressure on housing prices across the board”.
Our survey shows that new communities being built should focus on building shopping centres (27%), schools (23%), and healthcare facilities (18%) as a priority, as these are the key amenity drivers for first home buyers. At the bottom end of priorities for this market are sporting clubs (3 per cent), gyms/pools (5 per cent), and freeway access (7 per cent).
- 85 per cent of first home buyers in Sydney and Melbourne can’t afford their dream homes. Sydney housing prices are 250% higher than what majority of Aussies think it’s worth
- 63 per cent of first home buyers believe an affordable house costs less than $450,000 (median prices in Sydney are $1,152,000, thus 250% disparity)
- 64 per cent of first home buyers are only prepared to look at properties within their suburb of choice or surrounding suburbs
- 76 per cent of first home buyers can’t get into the property market because they can’t save the deposit or secure a loan
- Only 22 per cent of first home buyers are considering a new home build while 60 per cent are focused on buying an established home or townhouse
- 55 per cent of survey respondents did not think using their superannuation savings would help them secure their first home
With House & Land packages around 40 per cent less than established median house prices, the great Australian dream may still be within reach for many. If you’re thinking of building, it doesn’t have to be difficult. iBuildNew has helped over 25,000 people on their new home journey.
As an independent platform, we help Australians identify and compare new home designs, builders and land estates at no cost to you. It’s the smart way home buyers, who are considering a new build, can find the ideal options to match their individual needs. Book a call today.
Let us do the legwork for you.
- We’ll ask the right questions to better understand your needs
- We’ll create a recommended shortlist ideally matched to you
- We’ll answer specific questions or concerns related to home building, land purchasing or financing
Stacey Crommelin
Stacey loves exploring the great outdoors. When not among nature she can be found decorating and making improvements to her recently built family home.
1800 184 284
