Home ownership: A generation overcoming a generation-defining issue

Saving for your first home has become a generation-defining challenge. Rising values of property across Australia, high interest rates and record-level rents have combined to make the goal of ownership more difficult than ever before.

Nick Melrose

Writer and Enthusiast

First Home Buyer, Investing

Today, first-time buyers make up 22.5% of the homebuying market. Almost 30,000 purchases are made by young Australians every 12 weeks, according to the Australian Bureau of Statistics. In its last quarterly report, the ABS recorded 29,788 loan commitments by first homebuyers.

Across a year, there are approximately 500,000 residential real estate purchases, and first homebuyers are 25% of the buyer market.

Property ownership might be a mountain to climb, but many young Aussies still conquer the summit. And they do it through a mixture of determination and financial discipline, strategic planning and various state and federal government incentives.

Optimism that interest rates will fall again after a 0.25% cut in February is gathering pace and this is putting more emphasis on the need to get organised now as a first home buyer so you’re ready to act. .

The Reserve Bank of Australia is expected to cut the rate another 0.25% to 3.85% later this month. A downward move would take many retail mortgage rates below the 6% for the first time since 2023.

The Big Four banks are all predicting we could have a 3.35% cash rate by the end of the year. A lower rate will help give you more spending power and reduce mortgage costs. Of course, it also tends to push values higher.

Any further action by the RBA is certain to stimulate a generally flat market. Values rose 0.3% in April and the bellwether markets of Sydney and Melbourne remain below their all-time high – they’re down -1.1% and -5.4% respectively. The other mainland state capitals have never been more expensive.

Aspiring or active first homebuyers should investigate all available government assistance programs to maximise their financial position. Here’s a quick outline for you.

Home Guarantee Scheme

Eligible buyers avoid paying Lenders Mortgage Insurance (LMI), a Low Deposit Premium (LDP) or having to rely on a guarantor. Three variations exist under this program, including the First Home Guarantee, which helps you buy with a minimum 5% deposit. A similar benefit exists for buyers in regional areas. If you are a single parent or guardian, the minimum deposit is 2%.

First Home Owner Grants

These are state and territory programs that vary significantly in their scope, eligibility and funding. For example, in NSW, a total $10,000 is available with conditions attached. In Queensland, you can receive $15,000 or up to $30,000 if you are buying or building a new home. The government site for this scheme – First Home Owner Grant – breaks it down state by state.

Stamp Duty Concessions

State and territory governments will not charge first homebuyers stamp duty (also known as transfer tax) under certain eligibility conditions. Concessions are usually based on the maximum price of a property allowed before stamp duty is applied. Of course, these thresholds vary because of the significant difference in property values in each state.

First Home Super Saver Scheme

This is an federal government incentive program run by the Australian Taxation Office (ATO). It allows you to make personal voluntary contributions into your super fund to help you save for your first home. Concessional contributions are taxed at 15%, which is usually less than your marginal income tax rate. You can contribute up to a maximum of $15,000 in any one financial year, and up to a maximum of $50,000. Effectively, you will be using money to save for your first home that would have otherwise been subject to tax. Check the full details here on the ATO website.

These programs, combined with careful planning and savings discipline, will help you achieve your dream of homeownership.

By using ScaleApp to help create your plan and track your progress, you will always be in control of your property journey.

Download ScaleApp today, and discover how it can set you on the path to owning your first home.