If the global financial crisis has made Australians more savings-aware, then first-home buyers are taking it one step further by increasing their minimum deposit and waiting longer to buy.
The latest RAMS First Home Buyers’ Pulse Check Survey 2012 also showed the importance of family support, with 53 per cent of first-home buyers saying they had asked relatives to help them put together a deposit.
More than half (55 per cent) said they were living at home while saving to buy, including those who intended to buy in the next three months.
RAMS head of brand and marketing Chris Thornton said first home buyers appeared to be saving more now for a deposit than in previous years.
“A few years ago deposits were around five per cent for the average first home buyer, and now it’s often more than 10 per cent that people are saving for,” he said.
“People are really very serious about saving before they jump in.
“In the past, people have really squeezed themselves to get over the line, but now, they’re just being a bit more cautious.”
Living with parents and using high-interest savings accounts appeared to be key in the savings process, Mr Thornton said.
He added that the global financial crisis (GFC) had turned Australians into savers rather than borrowers.
“I think a general sense of uncertainty means that people are saving more and borrowing less,” he said.
“That is translating through to them wanting to have more of a nest egg before they get their own home – which is still the great Australian dream, but is also a big commitment.”
The survey also found that first-home buyers were more concerned about affordability than interest rates.
Canstar Cannex financial analyst Mitchell Watson said spending cautiously and investing more in the savings process was the best way to go, given the size of deposit needed.
“It is quite substantial, and it does take time to build, and any way you can get ahead by reducing other costs is going to bring that dream of owning your first home closer,” he said.
“With first-home buyers, you would only expect them to be putting aside five-to-10 per cent. That’s okay for a majority of lenders, they do want to see genuine savings.”
Mr Watson said a preference for accumulating cash rather than debt was a wise move for first-home buyers.
“The GFC showed us Australians’ love for debt, but perhaps that thought pattern has changed since that time,” he said.
“Instead, people are looking to set aside or clear their debts – again it comes back to the fact that they’ll get into their property sooner if they do that.
“But also if they don’t have a credit card sitting there, they don’t have the enticement or inducement to actually spend on their credit card as well – it will actually reduce their borrowing power significantly if they do have a credit card.”
Story by: Caroline Smith Story source: http://www.dailytelegraph.com.au