Fears federal government support for first-home buyers will drive up prices has fuelled a sense of anxiety among some buyers, with one house hunter revealing he felt compelled to bring forward his plans or risk getting priced out.
Dylan Buckle is seeking out his first home and wants to use the Labor government’s five per cent deposit scheme. He said he felt a sense of urgency to use the scheme, not only to help get him into the property market, but to save on costs.
With numerous other forces driving up home values, he said he felt this pressure at just 18 years old and feared he would be priced out the market if he waited too long to buy.
“Affordability really is becoming a pressing concern,” Mr Buckle said.
“Even in the last three months, units have gone up eight to 10 per cent and my borrowing power has significantly changed on what I can buy.
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Dylan Buckle, 18, is on the search for his first home with the five per cent deposit scheme before rising prices push him out of market
“If I were to wait two or three years, I’d really be pushed out of being able to buy – the entry-level market would really just not have properties available in my price range.
“It’s progressively becoming more difficult, requiring more effort and due diligence to find properties that match my financial capacity.”
Agents have revealed the government’s First Home Guarantee Scheme has been ramping up competition in the entry level market, driving up prices.
The scheme helps buyers with low savings scale the property ladder without needing pricey lender’s mortgage insurance.
Mr Buckle said he had mixed feelings about the scheme.
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Mr Buckle’s borrowing power puts him around the inner-city apartment market. Example of a Brisbane City studio listed for offers over $270,000
“I’d still be able to enter the market without the scheme, but within a much longer time frame, and with property prices increasing it would also cost more,” he said.
“The scheme does create an influx of younger buyers now able to buy, having an influence on increasing prices, but at the end of the day I am able to enter the market at a true entry-level price point ($350-450k).”
He added that it was not just the scheme fuelling his fears of missing out – he worried that steep prices rises in Queensland would make it harder to fulfil his plans of buying in Brisbane.
Using a pre-approval for a loan from Great Southern Bank, Mr Buckle’s current borrowing power puts him in the inner-city apartment range.
“I want to get my foot in the door,” he said. “The general consensus around property from anyone I talk to is start as soon as I can.”
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Dylan Buckle took a gap year after high school to travel then starting a full-time job to save his deposit
Great Southern Bank chief customer officer Rolf Stromsoe said their research showed nearly half of Australians believed rising house prices were their biggest barrier to buying a home.
“And with more than one in four Australians also saying there aren’t enough homes available to buy, it’s clear the pressure is coming from multiple directions,” he said.
“Despite this, there seems to be a strong sense of urgency, with our research showing that around 40 per cent of Australians are concerned house prices will continue to rise.”
Experian Australia director Brian Bond said the consequences of recent interest rate hikes could be substantial for Australian households, particularly given the already high levels of credit stress.
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Buyers are now navigating the market with additional pressure of recent rate hikes. Picture: NewsWire / Martin Ollman
“Our latest Consumer Stress Barometer reveals that mortgage holders, personal loan borrowers, and credit card holders have all seen their credit risk rise over the past year, and with inflationary pressures, especially in housing, food, and transport, driving up everyday costs, this existing financial strain is likely to be exacerbated,” Mr Bond said.
“This rate hike will not only impact borrowing costs but will likely drive-up default risks across multiple consumer groups, potentially putting more pressure on the credit economy.”
Mr Bond said younger Australians, who already face the highest credit stress, are particularly vulnerable, as they struggle with rising housing and childcare costs.
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The recent RBA rate hikes are impacting Aussies across all generations. Picture: NewsWire / Gaye Gerard
“Older Australians, particularly those in low-income brackets, are also feeling the pinch, with rising healthcare and utility costs further increasing their risk,” he said.
Mr Stromsoe said it was important for buyers to prepare before they started seriously looking, understanding their budget, exploring loan options early and having a clear picture of affordability.
He also recommended potential buyers consult with a lender or broker for expert opinion on their options.
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