First home deposits getting harder

Australian first homebuyers are having to work harder to build up enough money for a deposit, according to research house Canstar.

In a report released this week, the research house said that 10 years ago the nation’s average loan size for first home buyers was $15,000, while today it had ballooned to $290,000.

Its assessment said that while current falling interest rates were making repayments a little easier, the rise of property prices over the past decade was keeping the bar high for those trying to get a foot in the property door.

This meant higher prices were requiring larger deposits and a greater effort required to accumulate such amounts.

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Commenting on the research, Canstar senior financial analyst, Mitchell Watson said this meant the dreaded word “sacrifice” was coming into play.

“There are ways and means of getting there, such as living with parents or another family member to hasten the savings period or opting for a cheaper, less cheerful rental for the time being,” he said.

“Family help with the deposit is also proving popular and there are loans in the marketplace that are specially tailored with guarantor options such as using, say, 20 per cent of the equity in a parent’s home as a deposit.”

Watson said a further blow to first home buyers had come from the fact that banks were no longer offering 100 per cent loans and some state governments had axed the First Home Owner Grant on existing dwellings, while boosting the grants for newly built homes only.

This has been responsible for the first homebuyers’ frenzy of the past fizzling down to relatively normal real estate levels.