Victorian first-home buyers age: Why many are waiting until their 40s to purchase a property
A rising chunk of Victoria’s first-home buyers are getting their foot on the property ladder much later in life. But experts have warned against waiting. See their advice.
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
Victorian first-home buyers are getting older with those aged over 40 accounting for an unprecedented share of their numbers last year.
State Revenue Office figures have even revealed hundreds using government support to buy their first home last year were in their 60s, and thousands were aged 50 plus.
The State Revenue Office figures show that in the past five years the proportion of first-home buyers aged 40 or over has risen from 13.6 per cent of those getting a stamp duty concession or waiver in 2018, to 16.5 per cent last year.
RELATED: Time-travelling home prices open door for first-home buyers in their 60s
First-home buyers aged 40-plus double in Victoria amid COVID-19
Property experts share what they wish they’d known before they first bought a house
But as buyers get more comfortable waiting until later in life, property experts have warned wannabe buyers of all ages not to delay in 2023.
Property Home Base flat fee buyer’s advocate Julie DeBondt-Barker works closely with market entrants and said she had noticed they were getting older as past price rises had increased the time it takes to save a deposit and made buying young “more and more unattainable”.
But with 10 interest rate hikes by the Reserve Bank since May last year dropping borrowing capacity faster than home prices have fallen, Ms DeBondt-Barker warned those hoping to get a better deal by waiting for predicted falls of as much as 20 per cent they were making a mistake.
“There’s expectation of property prices to drop as much as projected by the banks … but we are not seeing that happening,” she said.
“There might be a 5 per cent or 10 per cent drop. But waiting right now, their loan will fall more with each new interest rate hike.”
PropTrack economists have calculated each 0.5 per cent increase in rates works out to a 5 per cent cut to borrowing capacity, meaning the average first-home buyer’s budget has been slashed by about $175,000 (35 per cent) if they had been able to borrow $500,000 a year ago.
While home values in more affordable brackets below $1.2m didn’t appear to be suffering as a result so far, Ms DeBondt-Barker said their values had plateaued making now one of the more stable times to purchase.
The state government responded to the growing issue last year by adding 7000 places to the Victorian Homebuyer Fund, in which they co-buy up to 25 per cent of home’s worth as much as $950,000 in metropolitan areas.
While stats for that program show the main age bracket accessing it are aged 25-34, it is also available to those aged up to 65 and across the 3000 homes settled the median price has been $620,000 — above the stamp-duty free threshold, and a sign buyers are waiting to buy higher-priced homes.
Loan Market mortgage broker Jacob Decru said with many lenders open to 30-year loans for people well into their 50s “so long as the exit strategy is there” a good super balance would be enough to convince most banks to lend to them.
FIRST-HOME BUYERS BY AGE 2022
Aged under 20 — 424
Aged 20-24 — 7514
Aged 25-29 — 16,178
Aged 30-34 — 13,857
Aged 35-39 — 8768
Aged 40-44 — 4400
Aged 45-49 — 2261
Aged 50-54 — 1295
Aged 55-59 — 648
Aged 60+ — 602
Source: State Revenue Office of Victoria
With further rate hikes increasingly unlikely each month he noted buyers building in a buffer to their mortgage today were well positioned.
Mr Decru added that the federal government’s First Home Guarantee (formerly the First Home Loan Deposit Scheme), that lets buyers make a start with a 5 per cent deposit and the government going guarantor on the loan to help them avoid lender’s mortgage insurance, was frequently helping older buyers who had been unable to save a larger deposit.
Figures from the National Housing Finance and Investment Corporation that oversees the scheme show 3 per cent of users were aged 50-59 in the past financial year.
The proportion of people using it aged 25-39 has fallen over the last three financial years, and risen for those aged 40 and up.
“Don’t listen to the outside noise, sit down and budget and talk with a broker to find out what you could realistically get,” Mr Decru said.
He added that first-home buyers could save up to $57,000 on the cost of buying including $15,000-$16,000 on lenders mortgage insurance via the Guarantee, a further $31,000 waived on stamp duty and an extra $10,000 First Home Owner Grant if they bought a new home.
Mr Decru also warned first-home buyers off waiting unnecessarily.
“If you do wait to next year, you are going to hit the market with heaps of other buyers,” Mr Decru said. “I wouldn’t be waiting just to see what happens. Back at the start of Covid they said the market would go back 20 per cent and it went the other way.”
Great Southern Bank home loan expert Jason Moussa said they were constantly seeing buyers coming in “initially doubtful whether they can afford to buy a property” with their average first-home buyer now aged 31.
“And then they come away pleasantly surprised by the possibilities,” Mr Moussa said.
FIRST-HOME BUYERS GETTING OLDER
2018: 40+ buyers account for 13.6% of 56,134 total
2019: 40+ buyers account for 14.6% of 58,987 total
2020: 40+ buyers account for 13.7% of 69,010 total
2021: 40+ buyers account for 15.5% of 72,626 total
2022: 40+ buyers account for 16.5% of 55,952 total
Source: State Revenue Office of Victoria
Among them was Malcolm Connell who was well in his 50s when he decided to talk with a mortgage broker about buying a home, having worked around Australia in everything from IT management to gold mining.
“I had expected I would never settle down and would drift all my days,” Mr Connell said.
“So it’s a message to people not to ever write themselves off. Its easy to read the horror stories and to give up, but we are living proof that you can do this, no matter your age.”
He was 58 when he and long-time partner Camille Nurka bought a three-bedroom townhouse in Pakenham for $490,000.
Their $60,000 deposit got a modest boost from Ms Nurka’s family, but the bulk came from “knuckling down” and the pandemic’s work-from-home ethos helping them save on transit.
They also switched out regular pizza nights for their own cooking in a move that helped Mr Connell “regain a somewhat svelt figure” as well as a 25-year loan from a bank — something he’d thought would be “inconceivable” at his age before sitting down with a loan broker.
First Place managing director Daniel Senia said his business specialised in building new homes for first-home buyers and had stopped seeing customers under 25. Mr Senia added that half were now married and 70 per cent had at least one child.
He warned that with expectations investors could seek to cash in on rising rents by building new homes it was possible even inflated building costs would remain high, forcing even first-home buyers willing to go to new housing estates to wait longer to buy.
“They are going to be paying more for rent, have less ability to save and they are also losing borrowing capacity while the cost to build grows,” Mr Senia said.
“So you are going to stay a renter, or you are going to be buying later in life.”
FIRST-HOME BUYER ADVICE FOR 2023
Malcolm Connell and Camille Nurka, first-home buyers
+ Talk with a broker, even if you don’t think you’re ready to buy;
+ Be open to government support programs;
+ Make a challenge out of avoiding take away meals and dining out, cook at home instead;
+ If you can work from home, put your normal transport costs into savings;
+ Put any amount into savings you can, even if it’s only a small sum some weeks;
Julie DeBondt-Barker, Property Home Base buyer’s advocate
+ If you’re going to be in the home for five+ years, buy one that needs fixing up;
+ Re-assess area’s where you “must live” and consider more affordable suburbs;
+ Look for tenanted homes where you could move into within a few months to avoid competition, but get advice about impacts to your loan on tenanted homes;
+ Go where nobody else is, seek homes that are photographed badly and unstyled;
+ Stick to your budget, especially as rates are rising;
Jason Moussa, Great Southern Bank home loan expert
+ Use home loan calculators and online tools to set realistic expectations;
+ Check whether you are eligible for government-backed lending support;
+ Look for a savings account with a high interest rate or features designed to build a deposit;
+ Review your subscription services and consider cancelling some;
+ Ask if there’s help available from the Bank of Mum and Dad early in your journey;
Jacob Decru, Loan Market mortgage broker
+ Don’t wait if you can afford to buy, home price prediction falls often prove wrong;
+ Older buyers should plan an “exit strategy” to shows banks how they can pay a loan off by retirement;
+ Don’t assume you are too old, some lenders accept a customer can work into their 70s if they have an office job;
+ If you struggle to save, look for programs that allow you to buy at a reduced deposit;
+ Talk with a broker about budgeting even if you think you’re a year or more away from buying.
WHAT’S AVAILABLE TO FIRST-HOME BUYERS
First Home Guarantee: buy with a 5 per cent deposit for homes worth up to $800,000 in Melbourne or Geelong, and $600,000 in regional areas.
Stamp Duty Concession: pay no stamp duty on homes worth up to $600,000 and a reduced amount for homes up to $750,000.
First Homeowner Grant: get a $10,000 payment from the government for building or buying a new home worth up to $750,000.
Victorian Homebuyer Fund: with an at least 5 per cent deposit the Victorian government will co-buy homes worth up to $950,000 in Melbourne or Geelong, or $600,000 in regional areas. Buyers cannot earn more than $128,000 as a single or $204,800 as a household.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Home buyers caught out as borrowing power falls faster than property prices
Where you should buy to make money now and become a millionaire in 10 years
Where AFL stars splashed their cash on real estate in the off season
Originally published as Victorian first-home buyers age: Why many are waiting until their 40s to purchase a property
Melbourne home hammer time reaching boiling point
Victoria has reached the peak of its spring market with more people set to make a purchase or sale in the next eight days than any other time of the year. See the homes we’re watching.
Local farming family sells historic Victorian homestead
A slice of Victorian pastoral history has changed hands for the second time in four years after it was sold in a seven-figure deal.