The average loan for a first-home buyer has risen by 50% in the past 10 years, with one state posting an astounding 66% increase, according to Australian Bureau of Statistics data analysed by First Home Buyers Australia (FHBA), a website created to help aspiring property owners.
The growth is also dramatically higher than the wage increase over the last decade.
FHBA analysed housing finance figures for April 2016 and compared it to data for the same period over the last 10 years.
According to FHBA’s analysis, the value of borrowings given to first-home buyers rose by 50% to $330,600 from $221,100 in the last decade.
The Northern Territory recorded the highest increase, followed by Western Australia, Victoria, South Australia and NSW. Tasmania, ACT and Queensland recorded the lowest.
The findings echoed one of the major complaints reported by first-home buyers in FHBA’s online surveys. People complained over their difficulty in keeping up with the price increases while saving up for a deposit! I too, hear this often from buyers in Newcastle.
The original deposit they intended to save in the amount of $100,000 for a $500,000 home ends up with them needing to save another $20,000 because the median value has risen. Another impediment to first-home buyers is the low interest rates. This is because people are not earnings as much interest on their savings.
However, investors are getting an assist from low interest rates because they can borrow more and also be granted many significant tax benefits like negative gearing and the capital gains tax discount.
Breakdown state by state
NSW: The average loan amount for a first-home buyer went up 51% from $258,700 in April 2006, to $391,900 in April 2016
VIC: 58 per cent rose from $209,900, to $331,500
QLD: 36 per cent grew from $214,500, to $290,800
SA: 56 per cent went up from $173,500, to $271,400
WA: 62 per cent rose from $197,000, to $321,100
TAS: 41 per cent grew from $165,400, to $233,900
NT: 66 per cent rose from $187,900, to $312,300
ACT: 38 per cent went up from $236,600, to $326,400
The analysis indicated that the increase in loan amount was significantly higher than the rate of inflation.
According to official Reserve Bank Australia data for 2006 to 2015, inflation increased by 25.3% compared to the 50% increase in first-home buyers loans.
The FHBA believes that negative gearing should be minimised to cut the interest rate amount that is tax deductible by half for people who own existing homes. But people purchasing new properties should be allowed to retain the deduction.
This issue definitely needs to be rectified if first-home buyers have any chance of getting into and owning their own home.
For more updates and information relating to your property, call Annette directly on 0418447856.