Australians are feeling more confident about their home-buying plans but it’s a different story for first home buyers, according to new Westpac research.
The latest Westpac Home Ownership Report has found that 44 per cent of Australians plan to buy a new home in the next five years, up 9 percentage points since July 2023.
The results are based on a survey conducted by Lonergan Research (commissioned by Westpac), which surveyed over 2,000 Australians aged 18 and over between 4 and 15 January 2024.
There was also a rise in home-buying intentions between July 2023 and January 2024 among those planning to buy an investment property (up 6 percentage points to 34 per cent), those planning to upsize (up 4 percentage points to 29 per cent), and those planning to renovate (up 4 percentage points to 35 per cent).
Among those planning to buy a home, the research uncovered that while a house is still the preferred property type, this decreased by 5 percentage points to 39 per cent between July 2023 and January this year.
However, preferences for apartments grew by 7 percentage points to 18 per cent, while preferences for townhouses and house and land packages doubled and quadrupled respectively to 12 per cent each.
Westpac managing director of mortgages, Damien MacRae, said that while home buyers prioritised more space and sought properties further away from the city during the COVID-19 pandemic, they are now willing to compromise on location to enter the property market.
“While it’s promising to see buyer confidence returning with growth in medium to long-term plans, this underscores the importance of addressing the challenge around supply shortages,” MacRae underscored.
“We welcome federal and state government initiatives which seek to address this, and now need businesses and government at all levels to progress with implementing these policies at pace.”
Bleak picture for first home buyers
In contrast to the broader home buyer market, the survey exposed a bleak picture for first home buyers (FHB).
Indeed, the research recorded a 3 percentage point decrease in FHBs planning to achieve homeownership in the next five years, with 86 per cent admitting that cost-of-living pressures have delayed their home-buying plans.
To combat housing affordability challenges, Westpac compared figures in June 2021 and February 2024, and noted that aspiring homeowners are seeking creative strategies and becoming more open to compromises to enter the market.
In February 2024, more than half (56 per cent) of FHBs were planning to buy with their partner (up 16 percentage points since June 2021), 75 per cent were willing to buy somewhere they previously were not considering (up 9 percentage points), and 50 per cent are considering rent-vesting to achieve homeownership.
Almost half (47 per cent) of Australians said they were willing to pay for lenders’ mortgage insurance (LMI) to enter the property market sooner, while 65 per cent reported cutting back on expenses like food delivery to help save for a deposit.
MacRae noted that FHBs are prepared to make short-term sacrifices to achieve long-term goals, and are focusing on saving money to do this.
“While some buyers have paused their housing plans, the intention to buy remains strong and prospective buyers are becoming more ruthless with their goals,” MacRae said.
“They understand it’s a big task, but they are determined to break into the market and are willing to compromise to get there. Buyers are casting their expectations wider, willing to compromise on location, and are forgoing everyday luxuries like food delivery. They are also more inclined to relocate and move to apartment living.”
Westpac reported that it has seen an increase in customers using its budgeting tools and resources as they plan for their future and bolster their financial position.
Home-related goals were the second-most popular savings categories created by customers in 2023, Westpac’s research revealed.
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