subject: Rising rents motivate 52% of Queenslanders to buy first home [print this page] Rising rents motivate 52% of Queenslanders to buy first home
Mortgage Choice 2011 QLD Future First Homebuyer Survey results
The recent increase in rental prices is wielding great influence over the majority of Queensland residents who plan to become first homebuyers in the next two years.
52% of respondents to the annual QLD Future First Homebuyer Survey* commissioned by Mortgage Choice, said rising rent was a key motivation behind their upcoming purchase.
It ranked second after to set myself up financially for the future by getting my foot in the property market door' and was followed by I see more benefit in investments such as property than I do in the share market'. In fact, this result was consistent across every state.
Increasing housing prices are also playing a large role, with this being the number one concern for 2011 for all QLD respondents. Despite the trepidation about housing affordability, 29% of these first homebuyers-to-be plan to buy solo, though this was down on 33% in last year's survey.
There's a real sense of urgency among those with home ownership in their sights, a persistent feeling of it's now or never. In the past couple of years these Australians have observed significant price rises for both units and houses and now they're starting to see rental costs jump up. Every month of saving for a deposit must feel like a long time to wait and watch an ever-changing property landscape.
Many are thinking they need to get in soon or they may not ever be able to afford a home that resembles what their heart is set on. So, these future first homebuyers are really putting their heads down and focusing on the goal while hoping it is some time before rates need to rise. More are making lifestyle sacrifices and as a whole they are saving more than their predecessors.
Key QLD results
8% said interest rates need only rise by 0.5 percentage points before they would give up on buying. This was a noticeable increase on the 1% who said this in the 2010 survey.
However, overall, respondents were more concerned about rising housing prices and other costs of living than interest rates.
13% will have over $20k deposit (vs. 8% last year) to put towards their first home purchase whereas 5% will try to borrow the full amount (vs. 9%).
43% will be aged between 18-29 years when they buy (vs. 53%).
29% will buy alone and 65% with a partner (vs. 33% and 54%, respectively).
Only 25% intend to spend more than two years saving for their deposit.
87% will make some kind of lifestyle sacrifices in order to purchase (vs. 73%).
68% will definitely obtain a loan pre-approval before purchasing while 30% might.
Recent floods had changed the minds of 31% about the area in which they plan to buy. Understandably, this was much higher than the national average of 17%.
7% expect to end up with a mortgage of over $500k when they buy, though the most common dollar range was $300,001 to $400,000 (33%).
Future first homebuyer motivations and concerns
The biggest motivation to buy a home for the first time continues to be simply getting a foot in the door (for 69% of respondents). This year it was followed by:2. Rising rents are making owning a property more attractive 52%.3. I see more benefit in investments such as property than I do in the share market 31%.4. Advice received from family, friends or a financial advisor 20%.5. I have researched and found property investment will enable me to achieve my financial goals sooner/better 15%.The top three concerns about buying a home were consistent year on year: not being able to afford repayments (50%), being committed to such a large financial obligation for so long (50%) and the length of time it takes to pay off (46%) though apprehension about timeframe dropped one place.Queensland residents were the most likely of any state to be concerned about their ability to repay.Bricks and mortar is still an attractive investment option for a diverse range of Queenslanders, pushed along by a growing sense of necessity thanks to rental costs continuing to rise. The ongoing squeeze' in rental vacancy rates, especially true of flood-affected areas, will presumably also be playing a part. For many, the notion of continuing to pay someone else for a roof over their head - and paying more for that every year - is an increasingly unappealing option when measured against the commitment of repaying a mortgage for the privilege of living in their own home.How and what they will buyBuying with a partner continues to be the most popular method of entering the market, for 65%, with this an even more attractive option this year, growing by 11 percentage points. Fewer will buy on their own than in 2010 (29% vs. 33%) and fewer will buy with friend (1% vs. 4%).Purchasing with relatives is also less popular. 1% plan to buy with family other than siblings and no one will buy with a sibling, compared to last year's 9% for co-buying with family. A relative will be the loan guarantor for 2% (vs. 1% in 2010) and 0.8% will use a monetary gift from family (vs. 0%).When it comes to deposits:5% will try to borrow the full amount.28% will contribute a deposit of up to 5% and borrow the remaining. 32% will contribute 6-10% and borrow the remaining.13% will contribute 11-15% and borrow the remaining. 8% will contribute 16-20% and borrow the remaining. 13% will contribute a deposit of more than 20% and borrow the remaining.1% said they will finance the purchase in another way. The fact that one in 20 first homebuyers-to-be from Queensland expects to borrow the full purchase amount shows the lack of understanding some have about today's mortgage market. 100 percent home loans no longer exist and possibly may never again. Luckily for those looking to put in only a five percent deposit, which was more than one quarter of respondents, the recent heating up of competition between lenders has seen loan to value ratios rise. This development and others over the last month mean it is more likely their home loan applications will be approved.43% of survey respondents will be aged 18-29 years when the buy, whereas 40% will be 30 to 39 years old, 15% will be 40 to 49 years old and 2% will be aged 50 years or over. When compared to the 2010 survey, this shows an ageing of the average QLD first homebuyer.In terms of the type of home, as with last year, most will buy an established one (58%). 13% will buy new, 5% plan to purchase land and build on it and 25% were not yet sure what they will buy.Sacrifices they will makeA higher proportion of QLD's future first homebuyers were intending to, or were already, making some kind of lifestyle sacrifice in order to make the purchase (87% vs. 73% in the 2010 survey). Queenslanders actually led the way in this respect when compared to their counterparts.The highest ranking sacrifices were:1. Cut back on spending 92% vs. 95% in 2010.2. Miss out on a holiday 60% vs. 59%.3. Delay a vehicle purchase 32% (this response was included for the first time in 2011).4. Purchase a less expensive property than desired 31% vs. 35%.5. Remain in my current job rather than move on 24% vs. 26%.Of all the sacrifices listed, the two experiencing the largest rise in respondents were delay having children' (up five percentage points) and purchase a less expensive property than desired' (up four percentage points).Those seeing the biggest fall were take on an additional job' (down 12 percentage points) and move back in / stay living with parents or in-laws to save on rent' (down five percentage points).As with the 2011 QLD Recent First Homeowner Survey results we released last month, this survey shows a greater proportion of Queenslanders than last year are making sacrifices in order to purchase their first home. A little cutting back in the short term for a significant long term gain is becoming a necessity for the vast majority. It's simply a fact of life these days if you want to enter the property market.Who will help themFor these future first homebuyers, only 48% of whom said they were either well informed about the property purchase process or knew the essentials, the most important factor for choosing a lender will be they are the cheapest all round' (52% of respondents). This was closely followed by they offer the best interest rate' (51%) and they have the loan with the best features' (48%).Only 16% will base their lender choice on which one will lend them the most money, with this response receiving the lowest proportion of respondents.Overall, the top five favoured points of contact for mortgage advice were:Mortgage broker 22%.Parents 22%.Lender 14%.Internet 13%.Financial advisor 13%.Encouragingly for the mortgage broking market, 27% of these first homebuyers-to-be will use a broker to purchase the property, 61% said they might and only 12% said they would not use one.To get into your first home, call me on 07 54744100 or http://askmeformoney.comhttp://www.articlesbase.com/mortgage-articles/rising-rents-motivate-52-of-queenslanders-to-buy-first-home-4382870.html
