Grattan Institute economic program policy director Brendan Coates said saving a 20 per cent deposit was still one of the biggest hurdles for home buyers,even as prices fell.
“Saving for a deposit is a way bigger problem than it has been historically,” Coates said. “Without family support it becomes much harder to get into the market.”
Coates said people without family help were less likely to be able to stretch themselves financially to get into the market,or to buy a bigger or nicer home,creating a larger divide between the"housing haves and have-nots".
“Having a wealthy family becomes a type of insurance because[buyers know they] can get help if things go south,and they can’t afford repayments,” he said.
Sydney-based Equilibria Finance managing director and mortgage broker Anthony Landahl said some buyers were surprised by the size of deposit now required.
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“Some people come to us not realising the size of the deposit they’ll need,so we need to educate them and set them up with a savings plan,so they can save for 12 months and come back,” Landahl said.
Many buyers were receiving financial gifts from family,or using a family guarantee which would enable them to borrow more,he said. Others were using government schemes,or paying lenders mortgage insurance,so they could purchase with a smaller deposit.
James Algar,of Mortgage Choice Dee Why,said many parents had been offering financial support,so their children could purchase nearby.
“The bank of mum and dad seems to have featured significantly more over the past couple of years,” Algar said. “Parents were saying ‘we’re happy to give you some money to help out and keep you close’.”
Buyers were seeing the downturn as opportunity to get into the market for less,but were still having to ask their parents for help,he said.
Melbourne-based Foster Ramsay Finance’s Chris Foster-Ramsay said fewer buyers were now saving a 20 per cent deposit,compared to pre-pandemic times.
“There’s probably an element of ‘that’s just too much’,” Foster-Ramsay said.
“A deposit of $50,000 or $100,000 is an okay amount ... but when you’re pushing to save double that,buyers think there’s got to be an easier way to save by asking for help.”
More children were relying on their parents,or inheritance money,when buying a home,Foster-Ramsay said.
The federal government’s First Home Guarantee was also still very popular,as were the state government’s stamp duty exemptions and concessions.