Home buyers riding razor's edge
Mary Bolling
June 09, 2007 12:00amIRST home buyers are facing the highest prices, biggest loans, and longest mortgage repayments ever.
But as desperate families borrow close to 100 per cent of their home's price, experts predict looming interest rate rises could push plenty of family budgets over the edge.
Australian Bureau of Statistics data yesterday showed more people were borrowing to get into the market.
Earliest ABS figures available show Melbourne's average first-home loan size in July 1991 was $67,500.
Ten years ago, in March 1997, it had jumped to $101,300 and this March it was up to $231,600.
Swinburne University housing researcher Terry Burke said it's now normal for first-home buyers to sign 30-year mortgages, and to borrow 95 per cent of the price of their home.
"Many first home buyers are right on the margins and once they've secured their house, most of them have very little savings," Mr Burke said.
"It would only take a very small increase in interest rates to push them over the edge."
This month, Housing Industry Association figures showed the great Australian dream has never been more expensive, with the median first-home price at $370,000.
The average income of households buying their first home is up to $93,400.
Australians for Affordable Housing spokesman David Imber said those figures are clearly shutting out average Australians.
"House prices are growing at more than double the rate of income growth," Mr Imber said.
"We keep hearing about low unemployment, but the average Australian wage is $55,000 a year -- being in an average or above-average job doesn't allow home ownership."
Mr Imber said high prices were creating a social divide between home owners and renters.
"It really is quite shocking we could have a generation of renters" he said.
Mr Imber wants government policies to help first home-buyers compete against investors.
Recent first-home buyer Paul Carboon, 36, agrees young Australians need help entering the market.
With his wife Leanne, and two young children, Mr Carboon hunted for months before securing their Notting Hill home.
"Trying to buy is a full time job and it's very depressing -- first to sign up for a 30-year loan, then to keep missing out at auctions," he said.
"And the people who are buying their third and fourth investment property are the ones that we were competing against."
Mary Bolling
June 09, 2007 12:00amIRST home buyers are facing the highest prices, biggest loans, and longest mortgage repayments ever.
But as desperate families borrow close to 100 per cent of their home's price, experts predict looming interest rate rises could push plenty of family budgets over the edge.
Australian Bureau of Statistics data yesterday showed more people were borrowing to get into the market.
Earliest ABS figures available show Melbourne's average first-home loan size in July 1991 was $67,500.
Ten years ago, in March 1997, it had jumped to $101,300 and this March it was up to $231,600.
Swinburne University housing researcher Terry Burke said it's now normal for first-home buyers to sign 30-year mortgages, and to borrow 95 per cent of the price of their home.
"Many first home buyers are right on the margins and once they've secured their house, most of them have very little savings," Mr Burke said.
"It would only take a very small increase in interest rates to push them over the edge."
This month, Housing Industry Association figures showed the great Australian dream has never been more expensive, with the median first-home price at $370,000.
The average income of households buying their first home is up to $93,400.
Australians for Affordable Housing spokesman David Imber said those figures are clearly shutting out average Australians.
"House prices are growing at more than double the rate of income growth," Mr Imber said.
"We keep hearing about low unemployment, but the average Australian wage is $55,000 a year -- being in an average or above-average job doesn't allow home ownership."
Mr Imber said high prices were creating a social divide between home owners and renters.
"It really is quite shocking we could have a generation of renters" he said.
Mr Imber wants government policies to help first home-buyers compete against investors.
Recent first-home buyer Paul Carboon, 36, agrees young Australians need help entering the market.
With his wife Leanne, and two young children, Mr Carboon hunted for months before securing their Notting Hill home.
"Trying to buy is a full time job and it's very depressing -- first to sign up for a 30-year loan, then to keep missing out at auctions," he said.
"And the people who are buying their third and fourth investment property are the ones that we were competing against."
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