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Young Australians still want in on the property ladder – but they have to pursue different avenues to get there.
A new CommBank study has looked at the impact of the pandemic and the booming property market on home buyers.
The study validated how lockdowns have inevitably reinforced the need for more space and a lifestyle shift, with the hybrid working model inspiring many Australians to entertain the idea of a sea change or a tree change.
According to Dr Michael Baumann, Commonwealth Bank’s executive general manager of home buying: “More flexible working from home arrangements introduced during [the] COVID-19 [pandemic] has meant nearly 50 per cent of those under 40 would consider moving interstate.”
Working from home has definitely affected how people think about property, and, according to the survey, those in Victoria have noticed the greatest change in their desire for a property with an outside space, close to nature, or in a regional area.
Barriers to home ownership
Dr Baumann highlighted that while the increased desire of home buyers is revving up property prices to help current owners develop equity and wealth, the other side of the coin is they also pose affordability issues for first-time home buyers and those wishing to sell and upgrade.
Survey respondents pointed at growing property costs and, as a result, the prohibitive size of deposit required as the two most common hurdles to property ownership in Australia.
This comes as both property owners and non-owners recognize how tough it is to buy a home, with over 60 per cent of property owners indicating that it is difficult to buy a home, and three-quarters, or 78 per cent, agreeing that it is more difficult for the present generation, especially those over 50, to buy a home (73 per cent).
Motivations to buy a house
Surprisingly, the research revealed that while price is the most significant barrier to entry for potential property purchasers, it is also the most compelling motivation.
Over 60 per cent of the respondents have expressed concern about wanting to purchase a property before it becomes prohibitively expensive for them to afford, and more than a third, or 35 per cent, expressed fear of missing out (FOMO).
Apparently, friends and family exert pressure on Australians, with 44 per cent of those who admitted to feeling pressure stating it comes from friends and colleagues who have already bought and parents or family members who want them to buy.
Furthermore, because of the pressure to buy, paired with growing property costs, more than a third, or 37 per cent, of Australians are considering moving interstate or to a regional town to pursue more affordable options that do not require sacrificing accessibility to work or property size.
Alternative options to home buying
With housing prices growing at historic rates in Australia, potential home buyers have resorted to alternative pathways to home buying.
“What I thought was most interesting was that a quarter have considered buying a property with parents, siblings, or friends because of concerns about housing affordability,” Dr Baumann quipped.
Research data showed that more than two-thirds pointed at affordability as the reason behind this trend, followed by the desire to buy a bigger or better house and spreading financial risk if something goes wrong.
Barriers to alternative options to home buying
The survey also investigated what would dissuade potential house buyers from purchasing a property with a friend or family member, and the clear majority of respondents (47 per cent) expressed anxiety about putting the relationship under stress.
Other reasons for not wanting to buy property with a “non-traditional” partner included the time-consuming procedure of co-buying and co-owning (43 per cent), and one in ten respondents didn’t know it was possible.
In order to break these barriers to home buying, Dr Baumann stressed the critical role of lenders in providing customers with new loan alternatives that assist them in gaining access to the housing market.
Innovative new solutions can “help customers to split the cost with friends or family where they can support one another into the same purchase while keeping ownership, finances, and repayments separate”.
Such innovation, according to Dr Baumann, can enable the borrower to “structure their home loan to suit their individual needs by choosing their loan amount, loan type, loan term, and repayment structure”.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.