A third of Millennials and a quarter of all Australians expect to buy a property in the next two years, with many having used the lockdown to accelerate their home ownership journey, according to ING research.
ING’s Future Focus: Homeownership Report, which pulls on two surveys of more than 1,000 Australian home buyers conducted by YouGov in June 2020, has revealed that COVID-19 has made home ownership seem more achievable to buyers.
Low interest rates (39 per cent), a more affordable housing market (33 per cent) and new government schemes (32 per cent) were cited as the key factors contributing to a sense that buying a home in the post-COVID market was more achievable.
The survey found that while financial concerns relating to saving for a deposit remains the number one barrier for prospective first home buyers (at 42 per cent), more than half of respondents (69 per cent) added that the pandemic had forced them to take more control over their finances.
More than two-fifths (42 per cent) said they had been able to save more money while in lockdown, while nearly two-thirds had saved money due to less commuting, eating in and saving on childcare.
As well as reducing discretionary spending (such as personal shopping and dining out), more than half of all buyers (51 per cent) said they had redirected savings brought about by travel restrictions to a future home savings account.
When asked why they were looking to buy a home within the next two years, 45 per cent said they had “rental fatigue”, while 22 per cent wanted greater stability and security.
Approximately a fifth (19 per cent) said recent events had shown them the importance of getting on the market to protect their future.
Younger people particularly keen to buy their own place
According to the report, Millennials (those born between 1981 and 1996) and Gen Z (those born between 1997 and 2009) are particularly eager to get onto the property ladder, with 77 per cent of both of these cohorts aspiring to own their own home and make sacrifices to do so.
Nearly half (46 per cent) of Millennial home buyers said the pandemic had made home ownership more affordable and achievable, with a third (32 per cent) suggesting that they plan on buying a home within the next two years. This is up on the statistic for all home buyers (regardless of age), which came in at 26 per cent.
The research shows that Millennials have also used the lockdown to get on top of their property goals by redirecting travel budgets to a home savings account (59 per cent), reducing personal spending (48 per cent), taking on a secondary form of income or “side hustle” (37 per cent), and moving back in with their parents (36 per cent), among other forms of saving.
Moreover, in order to buy a house sooner, half (50 per cent) said that they would consider living on the city fringes and the outer suburbs (45km or more from the city); more than one in five (22 per cent) planned to buy a smaller property in a cheaper area and rent it out until they can afford their forever home; and one in 10 (9 per cent) said that they would consider buying a property with a friend or family member to get on the ladder quicker.
The research also shows that COVID-19 has changed what Australians want from their home.
Having spent an unprecedented amount of time confined indoors during lockdown, more than two-thirds of Australians (68 per cent) said they need more space or a different type of space in order to be fully comfortable at home.
More than a third are looking for a change in their current living quarters, whether that be redecorating (13 per cent), renovating (10 per cent) or setting up a permanent home office space (9 per cent).
The findings echo those released by Westpac this week, which found that as more Australians are working from home and juggling school and family commitments under one roof, spacious living is now the top priority.
ING’s head of home loans, Julie-Anne Bosich, commented: “What this research suggests [is that] Millennials, and Australians in general, haven’t given up on the great Australian dream of owning their own home, they’re just rethinking how they go about getting there and re-evaluating where they might want to live.
“It suggests many people, especially Millennials, are being savvy by taking advantage of record-low interest rates, government assistance and a weakened housing market to get on the property ladder,” she said.
[Related: FHBs confused over grants and schemes]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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