‘Despair’: Aussies reveal biggest barrier to home ownership

Australians have revealed the biggest barrier they face when it comes to achieving the great Aussie dream, and the shocking number that have given up.

Almost a third of Australians have given up on the idea of owning their own property amid the rising cost of living, according to new research.

A recent survey conducted by news.com.au and Pepper Money questioned more than 5000 people, finding that while 53 per cent of respondents already owned their own homes, the majority of those who had not yet purchased a property believed it was permanently out of reach,

Almost one in five – 18.3 per cent of people – said they were working towards home ownership, while 17.2 per cent said they’d love to, but believe they would be priced out of the market. A further 11 per cent of people said they’d already given up completely.

For half of respondents, the astronomical price of property in Australia was cited as the main barrier to home ownership, while 29.6 per cent believed the difficulty of saving a big enough deposit was what stood in their way.

A further 18.7 per cent said they thought making repayments would be too difficult, while a small minority – 1.4 per cent – believed their credit history would be the biggest barrier.

For Daniella and Michael, a couple currently renting a two-bedroom townhouse on the Gold Coast, it’s a case of rapidly declining options.

“We have rented the same place for the past three years,” explains Daniella, 30. “And in that time we’ve already experienced a rent increase of about 25 per cent.

“What felt like a ‘nearly there’ deposit three years ago now won’t touch the sides for the kind of home we would like to buy; we’ve been forced to look further and further away from our ideal location, which brings with it a whole slew of other problems – like trying to get to our jobs without an hour-long commute.”

Michael says the couple has been weighing up a complete location change, or a switch to FIFO work and its associated higher wages, in a bid to hold on to their dream of one day owning their own home.

“There’s a rental crisis here on the coast so at any time we could be turfed out of our place and priced out of even the rental market,” he says.

“We’ve tossed up moving to far north Queensland or inland to a rural area and going FIFO for a few years, but then you have to ask yourself how much of your life you’re willing to let be dominated by the fight to own a home.”

While housing affordability in Australia has been on a steep decline since the early eighties, the cost of living crisis coupled with rate hikes and a relentless property market means that currently, things are more unaffordable than ever.

The median house price in Australia is now nine times the average annual income. Zoom in to the prices in any capital city, and that number balloons again.

Last year, research from Suburbtrends found that in order to own their own home in this climate, a person needs to earn about $300,000 per year.

According to figures from 2022, only one per cent of Australians earned over $253,000 per year, which means that without accessing the Bank of Mum and Dad in some way, many Australians, particularly from younger generations, will be unable to afford home ownership in its current state.

Australians have identified the biggest barriers they face to buying a home. Picture: NCA NewsWire / Gaye Gerard

Pepper Money chief executive Mario Rehayem said it was unsurprising so many once aspiring property buyers had given up.

“There’s a feeling out there among hopeful homeowners of despair since the cost-of-living crisis hit,” he said, noting about one in four survey participants felt they would be priced out of had given up on the quest for home ownership altogether.

Half of the Aussies surveyed reported high house prices as the main barrier for home ownership, while almost 30 per cent said the main thing standing in their way was saving for a deposit.

“Saving for a deposit is a common concern among many who want to get into the market, and the question of ‘how much is enough’ arises,” he said.

“In the saving part of your home ownership journey, it’s all about understanding your capacity to save consistently. Your savings pattern serves as a rehearsal for future mortgage repayments. While a larger deposit reflects discipline, don’t be disheartened if you think you haven’t saved enough. The key is ensuring you can comfortably manage the loan.”

Mr Rehayem said that while a deposit of 20 per cent of the value of the home you want to purchase was traditionally ideal for a deposit, it was important to remember there is “no universal rule”, and that there are many other factors that can come into play.

“There are non-bank lenders who can also provide options that may better suit, like lending up to 95 per cent of the property value,” he said.

“There’s no one-size-fits all rule for how much is enough; rather it’s about understanding your ability to save consistently.”