November 13, 2012
First time property buyers motivated to save longer
More first homebuyers plan to purchase their first property later in life, according the 2012 Mortgage Choice Future First Homebuyer Survey.
This annual study of 1,000 Australians who plan to buy their first home in the next two years found 41% of first homebuyers will be aged 30-39 years, 39% will be 18-29 years of age, 14% will be 40-49 and 6% will be aged over 50 years. Hence, the number of first homebuyers aged 30 or more years has increased from 54% in the 2011 survey to 61%.
The 2012 survey findings also show that first homebuyers intend to save for an average of 2 years before purchasing their property, compared to 1.8 years when the survey was conducted in 2011. The 2012 survey also revealed that these people are saving an average of 26% of their monthly after tax income.
Mortgage Choice Greensborough franchise owner, Hannah Fox said, “It is interesting to see more first homebuyers are saving for longer and purchasing later in life, perhaps when they are in a better financial position, have researched their ideal location well and are keen to settle into a property they will call home for many years to come.”
Fears over job security have rocketed over the past year with almost one in five (18%) up-coming first homebuyers claiming this is their greatest concern, compared to just 11% last year. Conversely, fewer buyers are concerned about rising house prices (22% this year compared to 31% in 2011) and even fewer are concerned about the impact of interest rates on their ability to purchase their first home (8% this year compared to 14% in 2011).
“While many of the economic indicators such as rate cuts, lower house prices and improved affordability might suggest now is a good time to buy, people are still nervous about their ability to sustain employment. Home ownership is still the dream for many Australians, however it is important to feel confident in your financial future before taking on the commitment of a property purchase,” said Hannah.
The survey found that first homebuyers’ property decisions are largely driven by lifestyle factors. The greatest motivator for first time buyers was to set themselves up financially for the future by getting a foot in the property market door(57%) while almost half (49%) said they would like to purchase a property where they can raise their family. The third largest motivation for first homebuyers was to avoid rising rent, which is making owning a property more attractive (42%).
Hannah commented, “The overall cost and financial benefits of home ownership are going to be big influencers but as our survey results show, the more emotional factors such as where you envisage bringing up your children is very high on the influencing stakes.”
Other key national statistics:
- Barriers: according to first homebuyers-to-be, the three biggest barriers holding all Australians back from purchasing property are the rising cost of living impacting people’s ability to save a deposit (37%); rising property prices (20%) and the rising cost of rent also impacting their savings (13%).
- Buying in partnership: more people are planning to buy their first property with another person – those buying with a partner or spouse rose to 66% in the 2012 survey, up from 61% in 2011.
- Professional help: year-on-year the number of respondents who say they will use a mortgage broker to help purchase their first home has risen. In the 2011 survey, 25% said they intend to use a mortgage broker and in the 2012 survey results this had increased to 32%.
- Biggest concerns: the top three concerns of first homebuyers about buying their first property are the same year on year. In descending order, the top three concerns are: being committed to such a large financial obligation for so long; not being able to afford repayments; the length of time it will take to repay.
- Lender choice: the best deals are the key reason people choose a particular lender. In the 2012 survey, the top three answers for what future first homebuyers will base their lend choice on are, in descending order: they offer the best interest rates; they are the cheapest all around – interest rates, fees etc; they have the loan with the best features (these are the same top three results from the 2011 survey).