First home buyers turning grey

From Banking Day:

The Mortgage Choice Future First Homebuyer Survey found that the proportion of people aged 30 and over has increased from 54 per cent in 2011 to 61 per cent in the latest survey, and that the proportion aged 40 and over has increased from 17 to 20 per cent over the same period.

…The greying of the first-home buyer market was also observed in a Genworth Mortgage Trends Report last year, which put the average age of FHBs at 31.

…Commentators usually attribute this trend to the high cost of housing in Australia…Genworth’s research suggested that there was another factor at play. People are accumulating significant amounts of personal debt in the years before purchasing their first home, which is acting as a hurdle to taking on mortgage debt.

And to add to the dark humour of it all, enjoy the following add from Westpac NZ, courtesy of Janet:

David Llewellyn-Smith

Latest posts by David Llewellyn-Smith (see all)

Comments

    • They are happy because they just flogged their IP for a vast sum and are heading off into the golden sunset to live the life of Riley.

      The new debt created is someone else’s problem.

      • All “money” is someone else’s problem. Under the present debt-at-usury currency system, “money” can only exist if someone, somewhere, owes principal+usury repayments on it.

        • > All “money” is someone else’s problem.

          Money is both commodity and credit. Physical gold and sacks of wheat are “money” too (albeit a tiny percent of the money supply).

  1. The high cost of buying a block of land and putting a relatively modest house on it (probably won’t get much change from $400 000) is likely another factor.

    All sorts of people buy to build but as I understand, the major demograph driving this market is young families. Even at todays low interest rates, $400 000 is probably stretching it for most, especially seeing as these people are at the stage in their lives when they are often on only one or one-point-something incomes ie: babies and under-school age children at home.

    If the cost of buying and building does not come down, young people will likely have little choice but to wait until they are older and all children are at school before they are able to become first-home-builders.

    Low interest rates may have made it a bit easier for them to buy an established home, but they are competing with investors and moving owner-occupiers/upgraders who have existing assets to flog/leverage, for whom the same lower rates has also made things easier.

      • No that won’t work. For a start the old codgers are likely to be past child rearing age, and secondly you can’t take a “Stock Lien” over any animal that doesn’t carry a registered stock brand.

        I suspect that branding children would cause some eyebrows to be raised in polite circles. Crocodiles are a problem as well, but for entirely different reasons.

    • As the sole income earner (soon to have another half income) in a young family I have to agree with this comment. There is simply no way I would want to buy a place right now, even with an income that is above the median (way above for my age). I pay $370 a week, live in a great area, 25 minutes to work, door to door.

      To buy a place in the same area it would cost nearly double that, for a comparable weekly cost I would have to go to the edge of the city which would add well over an hour to my travel time. That isn’t even including the months (years) spent saving for the deposit.

      Rent vs buy? Such a no brainer.

      • MattR – are you making the most of the First Home Savers Account? Where else can you get over 17% return? (guaranteed)
        $6000 per year into your FHSA + $6000 into her FHSA and the govt will give you $1020 for each account. Plus you earn about 4% which is taxed at 15% max.

        What I can’t understand is why this free money is so unpopular.

        ANZ and CBA dropped these accounts because there weren’t enough punters who were keen on them.

        • u r kidding right..

          putting into FHSA is like putting into “bank locker” with NO OPTION of using it.. it either goes towards a home within 4years or straight to SUPER.. either ways… the account holder cannot decide what he/she wants to do with 17% return!

          • Yeh they were my issues with the account too. 1 or 2 years ago I opened an ANZ one based on the taxation / government matching. But I still haven’t deposited a single dollar.

            Its ironic – if the market had just been allowed to correct instead of being held artificially high (i.e. by banks, land bankers, RBA, government), then I might still want to buy / already have bought a house.

            Instead, Australia (Victoria in particular) seems hellbent on turning Japanese – that is, more than a decade of stifling high prices, little to no capital growth and lower economic activity as a result.

            Trying to protect BB investments has effectively stolen the ‘Australia dream’ from so many of my generation, and now we don’t give a toss about it.

            So now I’m happy to have my living costs subsidized by speculators. If they try to take that away from me too, then I’ll probably just move overseas (NY or Silicon Valley pending fiancée approval :D).

          • That does make it an interesting option to increase super though…

            Riddle me this, riddle me that … in either case, the banksters will get the benefit of your labour=”savings”, and you will wind up with jack-all.

            One way or another, they’ll get “your” “money”.

          • You can keep the FHSA for longer than 4 years, that is the minimum term though. You can keep it till you’re 60 and then cash it out.

            Houses won’t be fair value in 4 years so I plan on keeping ours till 2020 or later. Even if interest rates are 1% this (17% hand out)is by far the best guaranteed return

          • You can keep the FHSA for longer than 4 years, that is the minimum term though. You can keep it till you’re 60 and then cash it out.

            What happens if you’re already over 60 and want to open one ?

          • You only get this 17% return until they change their minds… probably long before 2020. Besides, it gets taxed the same amount (15%) if you put it directly into super now, doesn’t it?

  2. greedypuppyMEMBER

    Guess I fit this trend..first home buyer last year-aged 47-my partner 48..reluctantly forced to buy when faced with the stark reality of looking for a new rental after a 12 year long term lease looked in trouble when the ceiling collapsed!

    • Same here.

      45 y.o. and never bought a property.

      Saving all my money in equities and cash.

      Whichever way I do the sums I can’t get the

      “cost of capital” + “ongoing outlays of ownership” vs “ongoing outlays of renting” equation to tip my hand toward buying.

      • Ditto… 47 and there’s no way I could ever agree to paying 8x the average annual wage (16x after you add interest) for a mediocre quality suburban house!

        Prices haven’t been ‘affordable’ for 15 years… and the long term trend for affordable prices finished in 1988… 24 years ago!

        What percentage of people buy a house before they’re 25? Anyone unwilling to over-pay is still on the side lines now waiting another 5-10 years until property prices ‘correct’…

        • I’m in a similar boat to you lot & you don’t have to look very far to find plenty of others that are priced out & cheesed off too.

          I know some X’ers that think they’re now financial guru’s because they Blindly started early with the wife, kids, & white picket fence – they’re the ones that were a pain in the arse at dinner parties, although they’ve gone a bit quiet recently. Now a lot of the poor buggers are busy swapping the first & the third objects & traumatising the second. Others have bought in the last 10 years & are running very hard just to stand still. Thankfully at least I don’t have either of their stresses.

          I see charts like these & wonder what it would be like to be a gen X in Japan…
          or if they just have a different set of problems?
          http://www.zerohedge.com/news/2012-11-14/charting-secular-decline-come-advanced-economy-house-prices

          I hear that Billy Joel song ‘We didn’t start the fire’ – But Someone certainly threw a lot of petrol on it! No one in ‘charge’ have the will to set it right!

    • That’s interesting, to see that there others older than me who haven’t bought property of their own. I’m not yet 40 and every one of my acquaintances, colleagues, friends, etc have bought houses and have the mortgages to show for it. The wife and I – we have this strange reluctance to take on a mountain of debt. Anyway, nice to know I’m not alone!

      • Interestingly different worlds we live in ronfire. I wonder if they did their sums? Or how much it has to do with our job circles (salary), life circumstances etc.? Are they sweating it? Or cruising?

  3. GunnamattaMEMBER

    First home buyers turning grey

    On concern they:-
    May lose their jobs
    May have made one of the all-time great dud investments
    May owe a lot of money to pay it off
    and May find interest rates climb as either Australia (and banks) lose AAA, or the world realises the Australian bank systems exposure to its own overpriced real estate, or starts to wonder how it gets paid back the vast sums of private debt Australia has.

    And

  4. My nan became a first home owner in her mid 70’s. Just before the boom where she lived.

    Kinda of funny actually. My grandparents had been screwed by a family member they’d meant to have been buying the place off. An endless 40 bucks a week for many years which never translated into ownership.

    Grandfather had died, she’d saved heaps, and eventually decided to make an offer to the family member. He took it, she got the first home owner’s grant and got the place for 30k in 2002! A year later things went wild and houses in the same street were going for 100k. These days they’re asking 200k+

  5. Don’t forget you can access FHSA funds after just two years and two days. People often think contributions must be made over four calendar years, but it’s over four financial years. So you could open a FHSA and contribute on June 30, 2013 (Year 1), July 1, 2013 (Year 2) etc. I did this and pocketed $4,080 in Government contributions in just over 2 years. Not all lenders recognise the Govt contributions as genuine savings, but if you’re attempting a 20% deposit it all helps.

    • Either side of July 1st is always a cracking idea for tax and hand-outs.

      15% tax on returns (like Super) is outstanding

      The $90k total balance limit that disqualifies from further $1020 hand-outs rises by 5% every year. This will most likely change if CPI is struggling to meet 3% p.a

  6. I am low 40’s, we have never owned property.
    But is this saving account for only if you take out a mortgage, or OK if you plonk all cash?

    • Counter,

      > You must contribute minimum of $1000 a year for a four year period (not consecutive though it can be)prior to use of money.

      > You must never have purchased a house before.

      > Monies can be transferred at any time to a super fund.

      > Only other use of monies can be purchase of a primary residence.

      (there is more but that is basically it – check ME Banks savings accounts for more details. Not sure who else runs these accounts at present).

    • Re Mortgage, not entirely sure what you meant. No, you don’t have to take out a mortgage, you can outright purchase using these accounts.

      Basically look at it as a cash only super fund that can be used to purchase a house.

      Govt contributes 17c/dollar for money contributed during that year.
      You only pay 15% tax regardless of marginal tax rate.

      Even in emergency situations you cannot withdraw the money for other uses i.e. medical expenses for life saving surgery.

      I see it as being a great idea myself, however those with only short term goals or limited financial understanding have avoided them like the plague, thus extremely low takeup by the public.

      • Can’t it take three months to get the money out of the account? OK if being put into lowering mortgage, but a bit of a pain for settlement if paying all cash.

        What if I buy 100acres, and want to build, is this considered residential, or a possible farm business asset?

        • And if I buy after two years for cash, I have to wait two years to access funds to pay towards mortgage. If you pay all cash, will the cash come back to you direct, or dispersed into super for not having a mortgage.
          These are some of the q’s I have. And if I buy a business/farm and use it as my residence, there are issues here as well.

          I don’t see a one year 17% return x4 in nominal terms all that attractive, when in four years the AUD’s fall will wipe the smile off your face.

          • Most of those questions are best fielded at the tax department rather than some random forum user.

            As for the benefit, well like any private investment (it is), you need to decide if the cost/benefit makes sense for YOU.

    • This account is designed to be used as a deposit on a house. Even if the deposit is 90% of the property value or buys it outright- full payment.

      It can only be used for a residential property – it cannot be related to a business in any way.

      Also, the residential property that is bought with the funds from this account must be your home for at least 6 months from the time of withdrawing from the account.
      https://www.moneysmart.gov.au/managing-my-money/banking/savings-accounts/first-home-saver-accounts