‘Massive’: Buyers on the hook for hundreds of thousands upfront

A deposit, stamp duty and loan insurance are hurdles budding buyers have to jump over when trying to secure a home. SEARCH: How much does it cost in your suburb?

HOBART buyers need between $87,302 and $311, 032 upfront to purchase a typical house, exclusive analysis has revealed.

Tax experts MCG Quantity Surveyors analysed PropTrack median home value data and crunched the numbers to show how much greater Hobart residents need to enter the home buying ring.

With a 20 per cent deposit of $74,472 plus $12,829 for stamp duty, a buyer could purchase a typical home in the city’s cheapest suburb, Gagebrook.

A 10 per cent deposit in the same suburb ($37,236) would require lenders mortgage insurance and stamp duty ($7672), bringing the upfront total to $57,737.

At the opposite end of the market, a 20 per cent deposit for a middle range Sandy Bay house would be $257,834, plus $53,198 for stamp duty.

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MCG Quantity Surveyors director Mike Mortlock said home seekers required “massive” amounts of savings to crack the housing market, but few could get the necessary funds together.

“Saving for a home has always been difficult, but what’s different now is that it is so much harder for people to save because of the cost of living crisis and the rental crisis,” Mr Mortlock said.

“We like to think of first-home buyers as staying at home with mum and dad while they save, but the reality is that most people don’t have that luxury.

“It becomes really difficult in a rental crisis to save when so much of your income is going into housing costs.”

Mike Mortlock.

Mr Mortlock said the secondary upfront costs of buying a home, such as stamp duty and lender fees, were often underestimated given most home seekers’ primary focus was on property prices.

“Human psychology is a funny thing,” he said. “Adding another $10,000 is nothing relatively speaking compared to the overall price, but if you think about it being your money, you realise it’s actually a lot. It all starts to add up.”

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Alex Muller and Mark Brudenell from Harcourts Signature.

Harcourts Signature property representative Mark Brudenell said navigating the path to homeownership can be a minefield for young buyers.

“It’s vital, especially for inexperienced buyers, to seek expert advice. Be that a finance broker, builder, solicitor and bank,” he said.

“The biggest problems for first-home buyers are understanding the process, and misinformation.

“With the cost of living, saving a deposit is always a hurdle. Often, people don’t even consider stamp duty until it’s time to pay it. And it can be a ton of money.”

Mr Mortlock said, in many cases, the upfront costs required to purchase were worsening income divides.

“With the amount of upfront money needed, it will be hard for you to buy unless you’re on a high income. Otherwise, you need an inheritance or money from mum and dad,” he said.

First-home buyers will need to be creative with how they get into the property market, Mr Mortlock said.

“Sometimes a quicker path to homeownership, for some first-home buyers, may be an investment property in a cheaper regional area and, after a few years of growth, using that to get the home they want.”

He urged state governments to consider further stamp duty reform.

“It’s a well known barrier to housing market entry,” he said.

Originally published as ‘Massive’: Buyers on the hook for hundreds of thousands upfront