Income buyers are under pressure in the Melbourne market – realestate.com.au

Melbourne first-home buyer Will Testa is saving $2,500 a month and living with his mother, but his $650,000 property dream is being crushed by rivals who “don’t blink” at $20,000 price increases.
On paper, industry data suggests the Melbourne market has leveled off.
But on the ground in Melbourne’s northern and north-west suburbs of Pascoe Vale, Glenroy, Airport West and Tullamarine, Testa says it feels anything but.
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At a recent auction on the city’s north side, he bid in $1,000 increments as he neared his ceiling. A rival responded in blocks of $5,000.

“I would go up $1,000, they would go up $4,000,” he said.

“You only had to beat me by $2,000, but you just added $10,000 to your own purchase price.”

It has become routine to see twenty groups flowing through starter homes.

Double-income couples, downsizing companies that have just sold, and stock investors often circle around the same quotes.

Mr Testa says bids of $1000 are quickly being overtaken by jumps of $5000 at auctions in Pascoe Vale, Glenroy and surrounding suburbs. Photo: Brendan Beckett

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“As a buyer on one income, I can only go so far,” Testa said.

“You’re competing with people who might have twice the borrowing power or who can spend that extra $10,000 or $20,000 without blinking.
“That’s where it starts to feel daunting.”

Mr Testa said the financial gap between single-income households and dual-income households is rapidly widening.

“A couple together might save $5,000 a month, I might save $2,500,” he said.

Mr Testa has considered the 5 percent deposit scheme, but says too limited a commitment in a competitive market entails financial risks. Photo: Brendan Beckett

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“Over time, that gap widens and the goalposts continue to shift.”

He has considered using the federal government’s 5 percent deposit program to gain an edge, but fears it may fall short.

“You can never have too much money when you buy a house,” he said.

“I don’t feel like intervening and not having anything left for renovations or emergencies.

“That’s a scary position to be in.”

He has also seen properties pass above their advertised guide before returning privately at higher prices.

“If prices rise another 5 percent, that’s about $35,000 for a $700,000 house,” he said.

“Being a single-income earner fundamentally changes what the bank will lend and what the repayments will look like.
“It’s not a small shift.”

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david.bonaddio@news.com.au