First home buyers prefer saving rather than buying

According to press release from the Mortgage & Finance Association of Australia, “First time home buyers have little confidence in the Australian economy, as they baulk at property purchases and hoard their cash”.

The press release detailed statistics from a recent Commonwealth Bank/Mortgage & Finance Association of Australia Home Finance Index showing only 5.4 percent intend on purchasing a property in the next 6 months.

Reasons for delaying their entry into the housing market were :

  • 72.1 percent said they were worried about the level of debt home ownership would require.
  • 44 percent cited they were delaying purchasing a first home due to economic conditions.
  • 20.5 percent of first time buyers believe property prices are too high.
  • But rather than purchasing and leveraging up in debt close too or beyond serviceability levels, would be first time buyers are saving instead. The figures show 36.2 percent were saving in excess of 21 percent of their income. Not a bad result at all.

    While 20.5 percent believe prices are too high, 46.4 percent believe prices will fall in the next quarter. This compares with only 20.9 percent predicting prices would fall nine months ago. In Victoria, over half (51.7 percent) believe prices will fall. House prices in Australia have fallen every month this year with little change in trend.

    The restraint by potential first home buyers has the property industry in a spin. In recent weeks we have been witness to a (life..) raft of claims by the property lobby suggesting it is never a better time to buy and clinging on to old data from yesteryear showing surging rents.

    Such a shortage of first home buyers has seen property professionals masquerade undercover as first home buyers in the media. Kim Ahern, 23, featured in this article in the Sydney Morning Herald said “As soon as we heard the [stamp duty] exemption was going to be taken away from us, we pulled out our finger and did something about it,” ”We couldn’t afford to pay for the house as well as all the fees and the stamp duty.” Kim Ahern, a strata manager from real estate agency LJ Hooker had apparently been looking for three years, and seized this opportunity of stamp duty concessions.

    Some agents are even claiming first home buyers are returning to the market in droves, in hope they will encourage some to change their mind and enter the market. What do they say about sheep? Not in this bunch of first time buyers – they have made up their own decisions.

    ยป Cash is king as first home buyers baulk – Mortgage & Finance Association of Australia, 15th November 2011.


    1. Love the photo of the woman with a megaphone. It sums up perfectly just how desperate agents are at the moment to get first home buyers in to save their Ponzi scheme.

    2. Having said that, I’ve been one of the potential FHB’s sitting on the sidelines.

      I put in a pretty low offer on a property last week, and was accepted. It was a divorce that wanted the money in a hurry. I picked up a 3 bedroom house (with deck and garage), on over 800m2, less than 40kms from Melbourne CBD, in a beautiful area in the outer east. The same property would have been 420-450 a year ago, and was picked up for well under 400k..

      We can afford the property on one wage, and are only borrowing around 300k.

      The difference between renting and buying the same property would only be 800 per month, something we can afford. (given we have been saving over 2000 per month on top of rent towards the deposit).

      I think many of these “affordable” sales will happen, bringing down medians about 20% from 2009 peaks. Interestingly, the vendor had a higher offer, (by 10k), but selected our offer as there was question marks over whether the higher offer could get finance approved. The Vendor wanted cash quickly, guaranteed settlement, and actually chose an offer 10k lower in order to secure that.

      Have times changed already?

    3. It makes perfect sense to save rather than borrow at the moment.
      In contrast the QLD government is doing the exact opposite, their receipts are collapsing from a lack of stamp duties on RE and there committments are exploding. Commonwealth Games 2018????????
      Perhaps the older generation should take their medicine instead of asking the latest generation to become slaves to the banksters. Yoda say stick it to the banks for their fraudulent money creation. Fiat Currency Crap!
      The credit contraction is leaving the RE ponzi scheme very exposed to the downside.
      Deflation now will reward the savers who can buy up big in a couple of years when assets are on sale as all the ‘smart boomers’ flog off the rentals for much needed food.
      More rate cuts to come intended to force people to take on risk! Wont work!

    4. Well, I was thinking of buying a house now and selling it for $50000 more in a years time and then doing the same thing each year for the next 20 years. Now your telling me this won’t work! Give a man a break! Now people know easy money can’t last forever. I have seen houses on the market in 2011 for less than the were purchased for in 2007 and still not selling. It’s the government fault for introducing the fhb grants. I wish I had a business that I could rely on the government to prop up when things were slow.

    5. How sad that so many people with a high mortgage can’t even feed there family properly. Lets understand one thing, houses are consumers. No they are not people but like people they consume. Fix me, paint me, add to me Oh! don’t forget my council rates, water rates, electricity rates and my $10,000 solar panels. Cost more than people, except they can’t love you when your sick or cloth you when your cold or even say thank you for taking care of me or put there arms around you for time spent on them…. ARE they worth replacing your families diet or social needs??
      Houses are takers not givers they are holes in the ground that won’t fill. I speak only to those who are chasing a house and not a home that is full of love. The Rudd govt started a project that has projected social unsuitability amongst families that will destroy families. Houses will go backwards for the next 5 to 10 years, as we are now in a period of savers, not spenders and this will affect economies. There is nothing the govt can do or banks to stop this.
      How rich are you? or should I say, ” am I living or just existing”. When your dead your dead.

      Two shots at a coffee house, only one shot at life!!

      Live and have and discover life with others and not just a house that consumes. Nice to have, not nice when it has you.

      If you are thinking I speak from a losers point of view, you are right. Almost lost the most important real-estate I know. Me!!
      Now I have everything I need and that is enough. How much is enough? enough.

    6. Thanks for your story happy. So its really that easy. I’ll have to go buy and buy myself a house now you have have awakened me to the possibilities of home ownership. And there I was thinking housing was an overpriced dead asset.

    7. Yoda agrees with John, housing is not an investment, it should be a right to live and raise a family if so warranted.

      Housing has become through a fiat currency, a credit factory for the banks and government to feed off, whilst enslaving its citizens to long term repayment plans.

      Wealth destruction is the policy of both major political parties despite the spin from the presstitues on TV.

      I’m looking forward to making my UN contribution from the carbon tax, it feels good to line the pockets of the investment bankers and global elite. May they enjoy the spoils at our peril.

      Saving in real money like gold and silver will deny the banksters/government their share of your wealth and continued fraudulent activities porning debt onto society.

      Keep on saving real money!

    8. Yoda The Carbon tax is a joke. Europe is trying to get rid of it and Labor is wanting in Australia. Labor has to go.

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