ANZ’s Home Owner Lead, Kate Gibson, believes these favourable conditions could attract new buyers into the market.
“Buying a home is an aspiration for many Australians, and for the first time, we’re seeing suburbs and towns in every state where it is more affordable to buy than rent.
“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market. For the first time in 15 years, most buyers are not chasing a rising market,” Ms Gibson said.
How long will it take for first home buyers?
While the market conditions are favourable, many first home buyers will still struggle to crack saving a 20 per cent deposit in Sydney or Melbourne.
ANZ and CoreLogic’s research suggests that this deposit rate will take home owners more than a decade to save, meaning many can’t enter the market right now, even if they wanted to.
In this instance, record low interest rates hurts potential property investors as they are getting a lower return on their savings.
ANZ and Corelogic’ methodology relies on wannabe first-time home buyers being able to save up to 15 per cent of their income before a deposit.
Following this methodology, it will take the average Sydneysider 11.4 years to be able to save for a deposit for a home loan and it will take a further 46.3 per cent of future income to service the mortgage. Currently, the same person living in Sydney is spending 32 per cent of their income on rent.
The story is not much better in Melbourne, with it taking 10.1 years to save for a deposit for a house and a mortgage being 41 per cent of income. Currently, the average Melbourne renter is paying 27.5 per cent of income on rent.