Where Are First Homeowners Buying Property in Australia?

It’s part of the Great Australian Dream - putting down a deposit on your first home.

But the time for saving up that deposit has blown out, with soaring home values, greater loan “serviceability” buffers and low wage growth all taking their toll. 

Recent research by Finder.com found an average single first-home buyer now needs at least 12 years to save for a deposit for an average unit and 16 years for an average house in Australia.

In New South Wales, that blows out to 16 years for a unit and 20 years for a house.

So if first home buyers can scrape that large deposit together - possibly with help from the so-called “Bank of Mum and Dad” - where are they looking to buy homes? 

Government assistance

A good place to start is to identify the areas where first-home buyers are making the greatest use of government assistance to help them get their foot onto the property market ladder.

Housing Australia (formerly the National Housing Finance and Investment Corporation) recently released its fourth annual Trends & Insights Report.

It provides data on the Federal government’s First Home Guarantee, Family Home Guarantee and Regional First Home Buyer Guarantee schemes for 2022-23.

All these schemes allow first-home buyers to enter the housing market with smaller deposits than the standard 20% required by banks.

Instead of having to take out expensive lenders' mortgage insurance required for smaller deposits, up to 15% of the value of the property is guaranteed by the government.

This enables participants to buy a home by putting down as little as 5% (sometimes even less) of the cost of the home. 

According to Housing Australia, this enables eligible buyers to get into their first home about 5 years earlier than if they had saved up for a traditional 20% deposit.

These schemes should not be confused with the government’s “Help to Buy” scheme, due to start next year, where the government actually takes an equity stake in the home.

Last financial year, Housing Australia says it issued more than 32,500 guarantees, helping support around 41,700 Australians into home ownership. 

And with eligibility rules being relaxed, it turns out that close to 1 in 3 of first home buyers in all of Australia took advantage of one of these government-backed guarantee schemes, up from around 1 in 7 the previous financial year.

Who are these first-home buyers?

Housing Australia has released metrics on the age, sex and income of first-home buyers who used their scheme.

The uptake of these guarantees by single women in the 35-39 age group is particularly noticeable, while a younger cohort of ages 25-29 appears to be making the most use of these schemes in rural and regional areas of Australia

Interestingly, more than 1 in 4 of all government guarantees issued in 2022-23 were to people with occupations designated as “key workers”, which includes teachers, nurses and social workers. 

So what areas are first-home buyers targeting?

Not surprisingly, first-home buyers are targeting affordable areas, often on the outskirts or in growth corridors of Australia’s major cities.

Perth’s rapidly developing southern and northern suburbs were key targets in Western Australia, while the areas around Ipswich and Logan/Beaudesert on Brisbane’s outskirts and Townsville, Mackay and Gladstone were all popular in Queensland.

In Victoria, first home buyer activity was strongest in Melbourne’s booming outer western and south-eastern suburbs.

Housing Australia says buyers supported by the First Home Buyer Scheme “prefer larger family-sized homes, with 68% of purchases being homes with 3 or more bedrooms” and “with a land size greater than 500sqm, reflecting the preference for larger detached dwellings.”

The price of homes purchased using Housing Australia assistance also varied from state to state.

For example, homes in New South Wales were the most expensive - Greater Sydney purchases averaging around the $605,000 mark, and homes in the Rest of New South Wales (which includes the major cities of Newcastle and Wollongong) were around $508,067. 

Homes were cheapest on the other side of the Nullabor.

Dwellings purchased with Housing Australia guarantees in Perth averaged $349,777, while the Rest of WA averaged $312,955. 

The table above shows the top postcodes for First Home Buyer guarantees issued by Housing Australia in 2022-23, with areas in Regional Queensland and Brisbane’s outer suburbs taking 5 out of the top 10 spots.  

3 of the other top 10 spots are filled by suburbs in Perth’s southern suburbs - Armadale, Baldivis and Hammond Park. 

What’s interesting is that Armadale (No. 2) and Beenleigh (No. 3) have both made it onto lists compiled by property analytics firms like CoreLogic and PropTrack of suburbs that have seen the best value price growth (26%-34%) in Australia in 2023. 

This seems to suggest that with or without government assistance, first-home buyer competition for larger homes in the affordable growth areas of Australia’s cities and regions is very strong, and will continue to keep home values in these areas buoyant for the foreseeable future.