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First Time Buyers Saving For Longer

Research shows many FHBs are saving for more than 5 years.

Rising property prices are forcing first home buyers to save for longer than ever before in order to get their foot onto the property ladder.

According to Mortgage Choice’s latest First Home Owner survey, which canvassed the opinions of more than 1,000 first time buyers who had purchased within the last two years, one in four first home buyers said they had saved for “more than five years” before buying their property.

By comparison, research conducted by Mortgage Choice in 2011 found first home buyers saved for “less than two years” before buying their first property.

“It isn’t surprising to see first home buyers saving for longer than ever before as property prices are climbing at an impressive rate,” Mortgage Choice spokesperson Jessica Darnbrough said.

“Research from RP Data shows property prices across Australia’s combined capital cities have climbed 10.9 per cent over the 12 months to September,” she said.

Ms Darnbrough said this recent surge in property prices has not only forced first time buyers to save for longer, but in some instances, stopped them from buying exactly where they want to.

“The First Home Owner survey found almost 40 per cent of first time buyers couldn’t purchase exactly where they wanted to. Of those buyers, 88.2 per cent said it was the rising property prices that had stopped them from purchasing in their ideal area,” Ms Darnbrough said.

But while rising property prices are forcing first time buyers to save for longer in order to get their foot onto the property ladder, the survey also found that today’s first home buyers are very comfortable with their mortgage repayments.

“Looking at the data, 36.9 per cent of first time buyers said their mortgage repayments accounted for less than 25 per cent of their after tax income,” Ms Darnrbough said.

“Meanwhile, in 2011, just 24.4 per cent of first home owners said their mortgage repayments were less than 25 per cent of their after tax income, while 50.5 per cent said more than 36 per cent of their after tax income was being spent on their mortgage.

“So while rising property prices mean first home buyers are required to save for their first home for longer, it is clear these buyers are also incredibly savvy.

“They are determined to not outspend their means and will make sure they are in a position where they can comfortably afford their mortgage repayments before buying.”

Ms Darnbrough also said first time buyers saw many benefits associated with purchasing property which is why they are more than happy to save for longer.

“When asked what the key motivator behind buying their first home was, 57.3 per cent of first time owners said they wanted to “set themselves up financially for the future”,” she said.

“This statistic says a lot about first time buyers and just how savvy they are.”

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