New research has revealed that more than a quarter of prospective Australian home buyers go to mortgage brokers as their first point of contact, as the dream of owning a home becomes much harder.
The Evolving Great Australian Dream 2018 whitepaper was put together by Mortgage Choice and CoreData.
In it, 86% of Australians said it was increasingly difficult for people to achieve the dream of buying a free-standing house. Nine in ten prospective buyers said it was too hard to get into the property market due to high property prices.
With affordability continuing to be the key trigger for a purchase, the whitepaper showed Australians are adjusting their expectations.
In fact, more Australians now see an apartment as carrying the same sense of home and permanency as a free-standing house.
Susan Mitchell, chief executive officer, Mortgage Choice said, “Owning a property has long been a cornerstone of the Great Australian Dream. However, with the growth in house prices, especially in metropolitan areas, the dream is evolving to encompass options beyond the traditional freestanding home on a quarter-acre block.
“Over the last few years, we have seen a surge in the number of people embracing apartment living, especially in metro centres where significant lifestyle upgrades such as pools and gyms are on offer.
“But while many Australians are happy with apartment living, the data continues to suggest others are only choosing apartments because they believe they can’t yet afford the traditional dream of a free-standing home.”
The whitepaper also revealed Australians are willing to compromise, with 89% saying they would move to a more affordable suburb and 77% saying they would move to a smaller property.
Other ways Australians say they are securing property is by paying Lenders Mortgage Insurance or enlisting a guarantor for their home loan.
Mitchell said the biggest hurdle home buyers face is saving a sufficient deposit that amounts to 20% of the purchase price and this has been made even harder by strong property prices, which have outpaced wage growth over recent years.
She added, “To put the challenge into perspective, today Australians need to save and sacrifice for many years to put down a deposit of $100,000 to secure a median priced home valued at $556,384. Not to mention the additional costs typically associated with property purchase such as stamp duty and legal fees.
“LMI is a fairly small expense in the overall cost of purchasing a home and it does have the benefit of helping a buyer purchase a home with a smaller deposit, thereby allowing them to get onto the property ladder sooner rather than later.”
The research showed that 28% of Australians saw a mortgage broker first when they purchased a home or investment property, which was up from 16% in 2017.
Younger Australians increased foot traffic to brokers by 30% this year, with 44% of 25-45 year olds consulting a mortgage broker first when buying a property.
Mitchell said, “In an increasingly complex lending environment, more home buyers are seeking the expertise of professional mortgage brokers first when they purchase a home or investment property, and this is likely to grow.”