Debt laden first homebuyers not optimistic that Budget savings incentive will work

New research has revealed that first home buyers still believe in the great Australian dream of home ownership regardless of being saddled with HECS debt and a lack of optimism about the recent salary sacrifice proposal announced in the Government’s 2017 budget.

While there has been plenty of airtime about the about the issue of young people and housing affordability, the opinions are usually coming from politicians, commentators and economists, rather than the people at the centre of the current dilemma.

As politicians debate the Government’s budget proposal to allow first home buyers to salary sacrifice for a housing deposit using their super fund, Stable Research reached out to nearly 300 people between the ages of 18 and 35 to drill down on their current circumstances and what they think about proposed attempts to pull the policy levers that might help them get a foot in the door.

Some of the key findings from this timely research include:

• The Government are going to have to do a major sell with their message to first home buyers, with most people indicating the proposal won’t help them save for a deposit. Significantly, 32% weren’t even aware of the proposal.
• Regardless of the current situation, the majority of first home buyers surveyed haven’t been deterred from the home ownership dream, with 77% still planning to buy a home at some stage. In contrast, over a quarter don’t believe they will ever own a home.
• Of those that have managed to get into the housing market, 31% currently own a home either outright or with a mortgage. 20% own more than one property, with the ownership of 2 properties appearing most popular within the home ownership group. Outside of real estate, shares were the most popular form investment.
• Nearly 20% of those who own a property have made a purchase in the last 12 months, whereas the majority of those surveyed made the purchase between 2 and 6 years ago. Over 60% used their own and their partner’s savings to get into the market, with 30% of people receiving a gift from family and friends that boosted their savings for the deposit.
• The majority of properties purchased were in the $250K to $750K price bracket, with current estimations also sitting within that price range.
• The bad news for first time home buyers was the fact that nearly 50% of them were saddled with a HECS Debt, followed closely behind by credit card debt.
• The majority of survey respondents were planning to reduce discretionary spending on clothes and to stop eating out or getting takeaway as much, at 78% and 71% respectively. Other savings measures that proved popular included moving to a cheaper rental area and buying a property to rent out immediately. In what could be considered good news for parents, only 32% said they would move in with family to save.

In relation to the Government’s superannuation saving proposal, some people agreed that it might help, but most comments that were provided to researchers included highlighting that prospective property owners didn’t want to “mess with their superannuation”, with some indicating that it should be kept for retirement. Others also believe that $30,000 in super savings wasn’t enough or would not make it easier for them to get together a deposit.

These findings were part of a survey conducted by Stable Research which closely followed the release of the 2017 Federal Budget.