Geopolitical tensions have only heightened financial anxiety.<\/p>\n
Despite this, Brisbane-based Mortgage Choice broker Laura Nadal said first-home buyers aren’t quitting; they’re just battling fiercer headwinds.<\/p>\n
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Buyers are more anxious now than they have been in recent years. Picture: Getty<\/p>\n
“The market’s rife with disappointment and frustration; people are way more anxious now than they have been in recent years,” she says.\u00a0<\/p>\n
“Interest rates, property prices and living expenses have also gone up drastically, squeezing deposit savings and borrowing power in equal measure.<\/p>\n
“At the same time, higher property prices require higher loans, which demand higher incomes to service them.”<\/p>\n
REA senior economist Anne Flaherty adds it’s an unfair reality: rates crush borrowing capacity, yet prices barely budge.<\/p>\n
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REA Group economist Anne Flaherty. Picture: Supplied<\/p>\n
“In 2022, prices did come down a little, but nowhere near what the market was expecting, given how much interest rates increased,” she explained.<\/p>\n
“The reality is when you have strong demand amid a housing shortage, home prices can stay quite resilient despite what interest rates do.”<\/p>\n
For the financially vulnerable such as casual workers, freelancers and single parents, buying a home can now feel impossible.<\/p>\n
Possible solutions<\/p>\n
Ms Flaherty says it’s become harder for low-income and vulnerable workers to prove to banks they can service a loan.<\/p>\n
“Casuals, freelancers and sole traders are seen as higher-risk by banks, so they must work harder to demonstrate their history of savings and their ability to pay back that loan.”<\/p>\n
Casuals generally need six months of income history; self-employed applicants or sole traders usually need two years.<\/p>\n
For these workers, consistency is everything, Ms Nadal adds.<\/p>\n
“Don’t have a break, and lock in consistent overtime if you can,” she recommends.<\/p>\n
For single parents, it can be even tougher. Banks slash lending limits for parents, assuming the cost of a child eats into savings.<\/p>\n
“Even with 20% deposits, the amount the bank’s going to be willing to lend often isn’t going to be enough to help you to get into the property market,” Ms Flaherty says.<\/p>\n
For single parents or solo buyers, Ms Nadal urges taking advantage of grants like the federal First Home Guarantee (which allows you to buy with a 5% deposit) and shared equity programs, where the government may chip in 30-40% for a stake in the home.<\/p>\n
She also recommends parental guarantors, co-borrowers such as friends or siblings under a tenants-in-common arrangement, or using border income to help strengthen a loan application.<\/p>\n<\/p>\n
“A border paying you $150 per week can increase your borrowing capacity by $30,000 to $50,000, which helps a lot in this market.”<\/p>\n
Rentvesting is another option that is becoming more common, Ms Nadal adds<\/p>\n
“First-home buyers stay living at home, use their parents’ house as a security guarantor, and buy the property as an investment initially until their income increases, allowing them to move later, or sell to upgrade.”<\/p>\n
In this market, even older buyers can struggle, said Ms Flaherty.<\/p>\n
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Prospective buyers can demonstrate ways they may be able to pay down a loan faster. Picture: Getty<\/p>\n
As the average first-home buyer age climbs, banks worry that retirement \u2014 often mid-loan on typical 25-30 year terms \u2014 could erode the borrower’s income and repayment ability.<\/p>\n
Ms Flaherty suggests demonstrating ways you may be able to pay down the loan faster, while Ms Nadal said older buyers may be able to use their superannuation to buy a home.<\/p>\n
Ms Nadal’s tips for all buyers include slashing living expenses and debt, and boosting your credit score.<\/p>\n
“Reduce your credit cards, personal loans , and any buy now, pay later [BNPL] scenarios. Banks scrutinise every transaction, which impacts your borrowing power,” she says.<\/p>\n
Finally, enlist a free broker; they’re gold for vulnerable workers, matching you to lenient lenders, she added.<\/p>\n
“Some lenders can take 52 weeks of income, others 48 weeks; some lenders allow one-year financials for a self-employed person rather than an average of two years.<\/p>\n
“Some lenders are happy to lend more than others, depending on their circumstances. A broker will know all this.”<\/p>\n
A broker can also help you plan ahead, Ms Flaherty explains.<\/p>\n
“They help you to set expectations around what deposit you need, how much you’re able to borrow, and what those repayments would look like under different interest rate scenarios.”<\/p>\n
Keep the belief<\/p>\n
Ms Nadal urged would-be buyers not to give up on homeownership, even if they are a vulnerable worker or low earner.<\/p>\n
“You’ll get there eventually. I’ve seen it: consistent income, hard saving, and boom \u2014 they’re in, even if it took them two years,” she says.<\/p>\n
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‘You just need to get your foot in the door’. Picture: Getty<\/p>\n
“You just need to get your foot in the door. Lower your expectations or buy further out where the properties are more affordable.”<\/p>\n
And remember, there’s an upside: market uncertainty could eliminate some of your competition in the buyer pool.<\/p>\n
“People who don’t have to buy \u2014 like investors \u2014 are sitting on the fence right now,” she says. “That makes it easier for serious homebuyers.”<\/p>\n