Sydneysiders are having to wait an unprecedented decade to put down a deposit on a new home, as desperate house hunters make extraordinary sacrifices to enter the property market.
Potential buyers are cutting back on their lifestyles, giving up vacations, delaying having children, taking a second job and even moving back in with their parents to make saving for a home easier.
More than half (55 per cent) of hopeful buyers in NSW have cut back on travel and leisure to help save for a deposit, while one in 10 have put their dreams of having children on hold, according to new research from Compare the Market.
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Couples with an average combined salary of around $145,600 could afford to unlock properties in 135 suburbs in the Greater Sydney region
The Compare the Market Household Budget Barometer report found that at least half of would-be buyers need support from their parents to secure a home.
The report also revealed which Sydney suburbs homebuyers should focus on if they want to get into a home sooner.
Couples with an average combined salary of about $145,600 could afford to unlock properties in 135 suburbs in the Greater Sydney region, including units in West Ryde, Bankstown and Enfield.
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Andreas Winter. Image: Luke Marsden.
Compare the market property expert Andrew Winter said one in five Australians had also picked up a part-time job and five percent had taken on a second job to grow their savings faster.
Mr Winter said raising a deposit is just one hurdle. As first-time buyers face larger loans and larger mortgage payments, that could mean that the pain once associated with raising a 20 percent down payment will instead be spread over the life of the loan as homeowners struggle with higher interest payments.
“A 20 percent deposit on an average home of about $940,000 in our capital cities would be $188,000,” he said.
“For many people, it could take almost a decade – possibly longer – to reach that goal, by which time real estate prices would have risen even further out of reach.”
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Bankstown was one of the Sydney suburbs that was more affordable for struggling home buyers
Mr Winter said there were not enough homes for sale for around a third of home seekers where they actually wanted to live.
“Entering the market often means a compromise, of course, but when you spend hours on busy roads getting to and from work, it is completely understandable that many young buyers are reluctant to live on the edge of town,” he said.
“So while the government has these ambitious construction targets, it’s really vital that we don’t just develop homes in the remote areas of our cities.
“A mix of medium to high density buildings will be key to ensuring people can afford to buy where they want to live and work.”
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Mark Ferguson. Image: Thomas Annetts
Waterloo resident Mark Ferguson recently bought an investment property in Melbourne, where he says the market is much softer and less challenging than Sydney.
“I was looking at buying with my partner and we were looking at houses in Sydney and for our budget we should have gone that far,” he said.
“We both work in the CBD, so a drive of more than an hour was not feasible for us. We ruled that out and looked at other options.”
Ferguson said he was considering making purchases in central Sydney, the west and inner west, but all locations were out of budget due to the borrowing capacity he had.
“The banks will tell you how much you can borrow and you look at what you’re buying with that, but it just doesn’t match what you need to live,” he said.
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Mr Ferguson bought an investment property in Melbourne, where it was cheaper than Sydney. Image: Thomas Annetts
Ferguson said having the help of a good mortgage broker has really helped him through the rental investment process – where buyers buy where they can afford to get a foothold, rather than where they want to live.
“I’ve always been very lucky, I’ve had really proactive brokers at the banks who could talk you through their options and come up with different ways to get things done,” he said.
“It’s definitely worth asking them a lot of questions, asking about the options, what different things they can do to try to put you in a situation that works for you.”
Ferguson said the goal is to keep the property as long as possible.
“If circumstances in life change, I will obviously reassess, but I always plan for the long term,” he said.
He offered some advice to buyers entering the restrictive market.
“Try to be as flexible as possible, look at options that you may not have thought of, because if you can find something that works and find a way to get your foot on the ladder, it will be easier after that,” he said.
Suburbs with some of the most affordable unit refunds include:
Carramar (NSW)
Fairfield (NSW)
Warwick Farm
Cabramatta
Liverpool
Canley Vale
Mount Druitt
Regents Park (NSW)
Merrylands West
Wyong
Source: Compare the market
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