Gen Ys give up on their dream of home ownership

More than one third of first home buyers believe rising interest rates have locked them out of the property market.

According to the latest Bankwest/MFAA Home Finance Index, a “two-speed” property market is emerging, with more Australians expected to be life-long renters. The Index found that more than half of Gen Ys say they are shelving their plans for buying a home because of the amount of debt they would need to carry to afford a property. This is an increase of more than 10% from the last survey in November 2009.

“We have never seen such pessimism amongst prospective first time buyers throughout the past five Indexes,” Bankwest retail chief executive Vittoria Shortt said.

“70 per cent of respondents were very concerned about the level of debt they will be committed to if they buy a property.”

According to MFAA chief executive officer Phil Naylor, first time buyers will be forced to revert back to basics and implement a savings strategy if they want to enter the property market.

“Given that some lenders are tightening home loan criteria, it’s no surprise that prospective first time buyers will need to make a concerted effort to save for a deposit. In fact our research showed more than 25 per cent of prospective first time buyers are looking to live at home in order to save a deposit,” Mr Naylor said.

“Of those delaying home purchases, fewer are asking families to help fund a home loan deposit. That figure has fallen from 20.4 per cent to 14.7 per cent.”

Of all states surveyed, more than 50% of potential first home buyers in Western Australia were the most optimistic of all when it came to the prospect of home ownership, which is significantly above the national average of 43.7%.