First time home buyers shun McMansions
First time home buyers are searching for cheaper and smaller homes located further from city centres in their attempt to break into the housing market, according to a new survey.
The latest Bankwest/Mortgage and Finance Association of Australia (MFAA) research report also uncovered an unprecedented shift in behavior among renters, with an increasing number saying they are prepared to forego the lifestyle advantages of renting for the perceived security of buying.
Interestingly, buyers are also increasingly turning their back on super-sized McMansions.
“The financial crisis has changed the aspirations of home buyers, effectively downsizing the great Australian dream,” said Phil Naylor, CEO, MFAA.
Mr Naylor said that 47.9 per cent of first time buyers are now looking to purchase a cheaper property than otherwise intended.
The MFAA/Bankwest Home Finance Index canvassed the opinion of 850 people on a range of issues relating to first home buyers.
Mr Naylor said first time buyers have resorted to a number of measures to enable them to enter the property market, such as looking for a smaller property (32.3 per cent) and seeking out an older property rather than moving into a new home (24 per cent).
“While Australia has the largest new home sizes, it seems first time buyers are turning their back on the McMansion dream and are looking at buying a home instead of a super-sized property that makes a statement about their lifestyle or prestige,” Mr Naylor said.
Another 31.3 per cent said they are looking for properties further from city centres.
Head of Mortgages at Bankwest, Dean Gillespie, said the survey found 43.8 per cent of first time buyers are toning down their lifestyle and putting money aside in case the economy deteriorates.
“In contrast to claims that first time buyers are likely to default on their loans as interest rates increase, these figures suggest that first time buyers are saving to prevent that from occurring,” Mr Gillespie said.
“First time buyers are actively saving to protect themselves from an economic downturn, which suggests people are more strategic than they are given credit for.”
But for renters yet to break into the housing market, the sentiment is bleaker.
“The vast majority of renters (67.2 per cent) say that renting is too expensive, with another 40.3 per cent saying that feel stuck in a rental rut,” Mr Gillespie said.
Mr Gillespie said about one in five renters were happy to keep renting so they could maintain their current lifestyle and avoid sacrificing home size, location and proximity.
“Some renters seem perfectly happy to continue renting, but they are clearly still in the minority,” Mr Gillespie concluded.
