First-home buyers are facing a grim reality with access to housing dwindling in almost every Aussie capital city.
Victorian first-home buyers’ chances of getting a foot on the property ladder have been slashed by a third in five years, with just one in 10 homes now in their reach.
New analysis by KPMG shows that the state remains the nation’s second most unaffordable for would-be homebuyers, with only young Sydneysiders worse off, and about 12 per cent of homes nationwide in the grasp of would-be first-home buyers.
It is believed many are now turning to riskier housing purchases that could put their health and safety at risk through increased exposure to bushfire, floods, power lines and asbestos and other building issues, as they look to keep the great Australian home dream alive.
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The data, which tracks the number of homes sold in price brackets within reach of a household earning $180,000 a year, shows just 10 per cent of all sales in the 2024-2025 financial year would have been an option for Victorians looking to break into the housing market.
In the 2019-2020 financial year that figure was 15 per cent, even with a lower $150,000 income used to test the historic data.
Around the country, just 5 per cent of homes sold in NSW in the past year were within reach, about where it was five years ago as a certain percentage of homes are apartments on busy roads and in similarly undesirable locations where first-home buyers can afford to purchase, but where home value growth is just a fraction of what happens for more desirable homes.
KPMG analysis of ABS new home approvals shows the majority are being green lit beyond the buying capacity of first-home buyers at north of $800,000.
First-home buyers could access about 15 per cent of properties in Queensland compared to 60 per cent of the market with a $150,000 budget half a decade ago.
There were also massive declines in overall affordability for both South Australia and Western Australia, where 25 per cent of homes are within reach today, down from 75 per cent and 60 per cent respectively five years prior.
Australian Bureau of Statistics data shows median home prices rose in New South Wales by close to 40 per cent in the five-year timeline. In Victoria they’re up 20 per cent, Queensland and South Australia both gained about 80 per cent and Western Australian prices have risen near 75 per cent.
While metropolitan areas account for 80 per cent of population in most states, the data also reflects a 50-50 split between Brisbane and regional Queensland with high numbers of first-home buyers also pursuing areas from the Gold Coast to Townsville and Cairns.
That broad rise was likely to impact other states in the future as buyers once priced out of Victoria or NSW might have looked to Queensland for a sea-change — but would now struggle to afford it.
KPMG urban economist Terry Rawnsley says town planners have a role to play in delivering more affordable housing, not just more housing.
KPMG urban economist Terry Rawnsley said the situation had “changed dramatically” in just five years and “we’re just running out of places where there is more affordable housing”.
“Median home prices continue to soar, but average first-home buyers aren’t targeting median priced homes,” Mr Rawnsley said.
“Instead, they’re seeking more affordable options, focusing on regional markets or competing for a shrinking pool of apartments and greenfield homes in major cities.”
The economist added that others would also be buying something older, or on a busy road and a bit run down “to keep themselves in the game”.
“And you might also have a couple who would love to have a home and have two kids, but they can only afford a two-bedroom apartment — and as a result they are having a smaller family than they might like to,” Mr Rawnsley said.
This poses a challenge for the nation as it not only needs to build enough homes to house Australians, but also with enough bedrooms to suit their needs and in the $600,000-$800,000 price bracket — which is difficult in many suburban in-fill housing projects.
First-home buyers are facing challenging conditions across the country, but especially in Sydney and Melbourne.
Despite this, ABS approvals data shows the vast majority of approvals coming through for new homes are for those priced above $800,000.
“The planning system doesn’t really think about the cost of homes, it’s just saying 10 storeys here and five here, and it doesn’t really think about what it costs the buyer at the end,” Mr Rawnsley said.
“There needs to be more thought about the sticker price at the end, so more people have a chance to get into home ownership.”
Real Estate Institute of Australia president Jacob Caine said the 12 per cent figure nationwide “strongly suggests that there aren’t enough affordable homes compared with the number of first-home buyers looking to purchase them”.
Mr Caine said that wasn’t just having ramifications for young homebuyers, but also for employers whose staff were having to commute longer distances or live in homes that might not best suit their needs.
He added that buying affordable could be a “double-edged sword” as it might help a purchaser step up the property ladder over time if done well, but could also be an impediment if the local area was compromised by having poor amenities.
Housing affordability in the harbour city has hit a point where it can’t really get much worse, according to KPMG analysis.
Mr Caine said there could also be health and safety risks for young buyers.
“Whether that’s poor construction quality or riskier materials like asbestos, or whether the condition of the property is so poor that it demands renovation or reconstruction,” Mr Caine said.
“And, generally, those properties are less energy efficient and they are more costly and the can produce worse health outcomes for those owners. Factor all this in together and the disadvantage can be compounding.”
Property Home Base buyer’s agent Julie DeBondt-Barker has worked closely with hundreds of first-home buyers and said it wasn’t uncommon for them to be forced into areas they don’t really want to live in.
Ms DeBondt-Barker added that 85 per cent would not consider a renovation and many looked at homes with issues that mean while they are buying it for less — it will also sell for less in the future.
The buyer’s agent said she was having to tell some she couldn’t be part of them purchasing properties in particularly compromised locations such as being beneath power lines or near river banks in low-lying areas.
Melbourne is the nation’s second least affordable city for first-home buyers, according to the KPMG report.
“And if you are in some bushfire areas you will have higher insurance, and they need to make the decision with their eyes wide open,” she said.
The research settled on $180,000 as its income figure based on research by the Australian Bureau of Statistics tracking the purchase price of homes by first-home buyers, which in 2020 was around $560,000 and today would be $760,000. By using this figure, above typical wages, they better capture buyers supported by the bank of mum and dad.
The data’s timeline precedes the expansion of the federal government’s First Home Guarantee, which now allows for first-home buyers to purchase homes with a 5 per cent deposit up to a certain price cap in each capital city and state. It is also from before the commencement of the federal government’s Help To Buy scheme where first-home buyers co-purchase a property alongside the Australian tax payer.
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