Reasons Why It’s Hard to Buy Your First Home in Australia

It’s everyone’s dream to find that perfect home for them. For newlyweds, owning their first home is a top priority – a place where two people can start a whole new chapter of their lives together. But it looks like this dream is going to be a little bit more difficult to achieve right now.

A couple of years ago, there have been talks about how difficult it is for first-time homeowners to buy their houses with reports saying that a drop from 71.4% to 67.5% of homeowners was seen in the last 20 years. However, household renting has seen some increase, especially before the pandemic.

In other reports, 86.2% of Australians find it difficult to purchase their house even if there are price declines. So, what could be the main reasons for this occurrence? What do these things have to do with the difficulty in purchasing your own home? Let’s find out. Here are some of the things that are really hurting the property market condition as told by Australians.

Affordability Pressures

Pressures in housing affordability are seen to be a huge contribution to why many first-time homebuyers find it extremely difficult to purchase a house. Prospective buyers still choose to purchase smaller properties despite some of the price declines over the years because bigger spaces would often mean to be unaffordable to so many people. Furthermore, many find it also challenging to save sufficient deposit for the property they are eyeing which could be another reason for this.

Delayed Entry to Ownership

Another reason why it is somewhat difficult to buy a house is generational change. What is generational change? It's the current phenomenon wherein young homeowners are decreasing significantly because people are starting to invest a little bit later in life. For instance, in 1982 the percentage of owners aged 25-34 was 56%. In 2011, only 34% was recorded for this age group. There are also studies indicating that the distribution of housing inefficiently is one of the problems and not the supply. This leads to a lot of homeless people or those that are really struggling to pay for their houses.

Changes in Priorities

Recent studies have revealed that millennials are much more interested in investing in life experiences and having the “YOLO” or “You Only Live Once” kind of lifestyle. Instead of a huge investment like buying property, more young people choose to live in the moment and enjoy trying different kinds of foods and other experiences, including, traveling. Another thing is that most properties that the younger generation prefers to value proximity. Most of them are not willing to sacrifice better transportation for owning a place that is too far or out of reach.

Planning Controls

Planning controls may affect the development of houses in a higher density most especially in the middle suburbs. Apart from the supply factor, this is seen to be a huge contributor to why it's much more difficult to purchase now. Not to mention the charges and fees developers have to consider before, during, and after the construction. There are also some problems in terms of mortgage debts being relatively higher than average household incomes. This is seen to happen in all age groups.

These are just some of the reasons experts see that make it harder for first-time buyers to own their first home, but surely there are more and it’s important that the government find ways to make it easier for many, especially now. The initiatives such as the first-time home buyers scheme need to be expanded more in order to widen their reach.