“If Mum stops breathing, I’m not resuscitating – I’m going house-hunting.”
That’s the headline that accompanies an opinion piece published this week in the Sydney Morning Herald, and while it’s clearly designed to provoke a response, does it reflect the state of the Sydney property market right now?
And seeing as the latest New Zealand house price figures show Auckland’s property market is now on the road to recovery after a year-and-a-half slump, are first-home buyers here in the same boat?
The Sydney Morning Herald opinion piece, by Australian freelance writer Stella Spackman, has certainly captured the public mood across the ditch, with the article one of the most read on the news site.
Start your property search
In it, she sets out the challenges facing her generation when it comes to buying a house.
Read more:
- Tony Alexander: Higher interest rates unlikely to kill off house price surge
- Buying a house? Here's how much you should offer to pay
- First-home buyers pay almost $1.8m for Auckland cottage
“My 60-something parents bought their Sydney home in the 1980s. Like most of the Boomer generation, the global expansion of free-market ideology meant money was free-flowing and plentiful.
“My generation grew up assuming we’d have it just as easy, and we were wrong. We were promised a future where we could marry young, enjoy full-time employment and raise children in a home we could call our own. These days, that dream is restricted to the privileged few.”
Spackman notes that she’s a good decade away from being able to buy, with the median age of first-home buyers in Australia rising from 24.5 years old to 34.5 between 2000 and 2020. “The median home price in Sydney is A$1.46 million [NZ$1.56m] and, for house hunters, an annual income of A$255,000 is required to guarantee sufficient borrowing capacity,” she writes.
“Of course, I could wait for my inheritance but that will probably arrive after my senior’s card. My smoking, drinking grandparents lived until their mid-90s and my health-obsessed parents will probably live forever.
“To make matters worse, they have joined their generation’s hottest trend: the ‘grey divorce’ – and are planning to sell their major asset, the family home. My mother says that, having climbed the property ladder, she is about to slide down the asset snake to meet me somewhere near the bottom. She jokes about moving in with me in my inner-west rental. Fine by me, but I’m not resuscitating her if she stops breathing, I’m jumping onto [real estate site] Domain.”
Spackman’s harsh assessment chimes with much of the commentary around house prices in Sydney. The market revival at the start of the year caught many buyers by surprise, and has revived conversations around housing affordability.
Ray White chief economist Nerida Conisbee: “I say to people, ‘Buy anything and buy it early to get on the ladder’." Photo / Supplied
Ray White chief economist Nerida Conisbee told OneRoof that while Australian mothers were safe, it is a lot harder to buy now than it was previously.
“Our cities have grown and housing supply hadn’t kept up, so we have a supply problem. Cities need higher density housing to accommodate that, and that means the first home is an apartment not a house.
“People in Sydney or Melbourne have got their heads around that, but in places like Adelaide they haven’t.”
She said that savvy first-home buyers were buying a cheap investment property somewhere else – often a place they’d never live themselves – and continuing to rent in their desired suburb.
“You can buy a house in Adelaide for $400,000 and get good rent, while you continue to rent in Bondi and enjoy the Bondi lifestyle. That’s how they get on the ladder, and people do well because of leverage – for a 10% deposit, if the property goes up 10% you’ve doubled your money,” she told OneRoof.
“I say to people, ‘Buy anything and buy it early to get on the ladder’. Worst case, if you bought cheap in your 20s, by your 60s you’ll have paid it off; best case is you’ve leveraged and have traded up.”
House prices in Auckland are finally on the rise after a year-and-a-half-long slump. Photo / Fiona Goodall
In New Zealand, the market slump has run its course, with property values in most of the major cities on the rise. Auction rooms are busier too, with first-home buyers facing increased competition for the small pool of properties that are on the market.
CoreLogic NZ chief economist Kelvin Davidson told OneRoof the situation facing first-home buyers in New Zealand, while challenging, wasn’t as stressful as the one facing Australian house hunters. For one thing, the numbers aren’t as harsh.
Reserve Bank figures, he said, showed that the average gross income of first-home buyers in New Zealand was $157,000 (that could be one, two, or more people), which is nowhere near Sydney’s A$255,000.
As of August this year, the average debt first-home buyers were taking on was $551,000, while CoreLogic’s own data showed that the average price paid for their home was $688,000.
“There will be some people struggling and we don’t see them [in the figures], but there are some people being successful. At the moment, first-home buyers have a record share of the market, the highest since 2005, and they make up most of the borrowers with less than 20% deposit – though I suspect most wouldn’t have less than 10% deposit,” he said.
“We can’t quantify the Bank of Mum and Dad but it’s not everybody. It’s always been hard to buy – no first-home buyer has ever said it was easy. The average age of first-home buyers is 35 to 36, but part of that is choice – everything is happening later in life.”
- Click here to find properties for sale
