AN ALARMING proportion of people with plans to buy their first home are starting from a negative financial position, new survey results show.
The research revealed roughly two in five aspiring NSW homeowners admitted they had non-property related debts to pay off before they could even start saving a deposit for a home.
This was well above the proportion of house hunters in debt in every other state, including Victoria and Queensland.
In those states, roughly a third of those with plans to buy a home were in debt.
Other results from the latest Homebuyer Barometer study from non-bank lender homeloans.com.au suggested those with debts considered them a major obstacle to getting into the market. Nearly two-thirds wanted to pay off their debts before they started saving for a home.
Homeloans.com.au spokesman Will Keall said there was a clear difference between generations in the amounts of money they needed to pay off.
“Worryingly, it’s the millennials who had the greatest debt to pay — over $10,000 — while saving for a deposit,” Mr Keall said. “Those aged between 45 and 64 had the smallest debt, with 90 per cent of those in that age range needing to pay off less than $5000.”
27 Stanton Rd, Haberfield is for sale with Raine and Horne’s Morris Toscarno for $3.5 million.Source:Supplied
Richardson & Wrench’s Lang Crighton said many young people were struggling to get into the housing market due to having too many other financial commitments.
“They want the flashy car and the overseas trips. That does make it harder,” he said.
The high volume of people in debt was one of the reasons almost a quarter of NSW respondents took more than five years to save a home deposit, the Homeloans.com.au data found.
With Sydney prices the highest in the country, NSW buyers were also the most reliant on parents to help them stump up a deposit and tended to take longer to save for a home than buyers in every other state.
In Queensland and Western Australia, for example, almost a third of homebuyers took less than a year to put together a deposit.
Inside the Haberfield home. With a price guide of $3.5 million, such chatacter charm is out of reach of most first home buyer budgets.Source:Supplied
Even after clawing their way out of debt and saving enough deposit, few buyers felt home and dry — getting a loan approved was rated among the most stressful parts of the buying process.
“Navigating the maze of mortgages is obviously overwhelming for many first home buyers, with more than one in five Homebuyer Barometer respondents across the country citing that as the greatest stress in buying a home,” Mr Keall said.
The challenges of obtaining financing and high prices could explain why more buyers were willing to compromise on their homes. A Finder.com.au study showed 78 per cent of Aussies would tolerate a not-so-desirable property just to get into the market.
Part of this thinking was out of necessity, Finder money expert Bessie Hassan said, since properties that ticked every buyer’s boxes were usually out of reach of their budgets.
“Wish-lists are going out the window as buyers compromise to get their spot on the property ladder,” Mrs Hassan said.
An example of current listings that would tick common buyer preferences — large, character charm, inner city location — include a five-bedroom house on Alexandra Rd in Glebe for sale at $3.5 million.
And No. 27 Stanton St, Haberfield (pictured on our cover), ticks some of the same boxes and is for sale at $3.5 million. None of the Sydney homes currently for sale with direct beach access, meanwhile, are below $1.5 million
