‘Much harder’: How much you need to buy in Geelong suburbs

Geelong homebuyers need to be creative as new figures reveal how much they need to save to buy a home in each suburb. SEE COST BREAKDOWNS

444 Ryrie St, East Geelong, is selling at a range from $849,000 to $929,000.

The mammoth hurdle Geelong homebuyers face to break in to the property market has been revealed in new data detailing the typical upfront costs needed to buy a home.

The exclusive figures show homebuyers needed to amass between $63,000 to more than $180,000 to pay as soon as the property sale is settled, depending on the suburb.

The data calculates the upfront costs of buying a home in each Geelong suburb based on an analysis of PropTrack AVM figures by tax experts MCG Quantity Surveyors.

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The calculations show 10 and 20 per cent deposits and other costs such as stamp duty and home loan fees.

PropTrack median home prices range from $392,000 for a unit in Herne Hill and $450,000 for a house in Norlane up to $1.6m for a house in Barwon Heads.

MCG Quantity Surveyors director Mike Mortlock said saving for a home has always been difficult, but it’s so much harder now because of the cost of living crisis and the rental crisis.

Mike Mortlock.

“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,” he said.

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

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

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

“Sometimes a quicker path to home ownership 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.

6/1A Azilemot Ave, Herne Hill, is listed for sale with price hopes from $335,000 to $355,000.

Real Estate Institute of Victoria president Jacob Caine said industry lobby proposed an increase to the GST from 10 per cent to 10.45 per cent in order to eliminate stamp duty and also land tax and payroll tax.

“The data that we have suggests somewhere between 90,000 to 100,000 families, couples and individuals don’t move in any given year because of stamp duty, because it’s an impediment,” Mr Caine said.

“It represents about six months of pre-tax income for an Australian earning the median wage, and it adds on average around one year of additional saving time for a first-time buyer looking to save enough to purchase their first home.”

Mr Caine said Australian Prudential Regulation Authority (APRA) also needed to be less risk averse by lowering the margin rate that they were assessing loans on to give buyers more borrowing power.

“Their assessment rate is stopping a lot of people from getting into properties that they can actually afford,” he said.

Similarly, PropTrack senior economist Paul Ryan said the requirement to have a 20 per cent deposit without incurring lender’s mortgage insurance (LMI) fees needed to be looked at.

“I think it’s way too large; it’s much bigger than serving the intended purpose, which is just to show that potential borrowers have some discipline,” he said.

He added that there was a growing prevalence of family lending as it was so difficult for first-home buyers to save enough to cover their costs.

Australian Property Home Loans director Adele Andrews said stamp duty could be somewhat prohibitive when trying to get into the market, and perhaps the $600,000 threshold where it didn’t need to be paid should be raised.

But in terms of LMI, she said it was important for first-home buyers to realise that it was just a “small fee” that allowed them to get into the market sooner.

“Lender’s mortgage insurance does not need to be a reason not to buy,” she said.

“If you did the cost benefit analysis in terms of how much equity you’re missing out on by avoiding LMI, the scale would probably tip towards the LMI’s way.”

Originally published as ‘Much harder’: How much you need to buy in Geelong suburbs