Late last year, Sydney man Matthew Brophy finally found a way around the housing affordability problem. He and his wife decided to relocate, purchasing a house about 13kms from Brisbane’s CBD.
Mr Brophy, a school teacher in his early 40s, grew up in Sydney’s northwest and had been keen to settle in the area. But he couldn’t find a single property in Seven Hills or neighbouring suburbs to fit his budget.
By contrast, he secured a four-bedroom Brisbane property, on a 700-square metre block, for about $600,000.
“The prices were so much cheaper in Brisbane, particularly with regard to the proximity to the city and still having a mortgage that’s reasonably comfortable to pay on one wage,” he said.
Mr Brophy is part of a growing trend of prospective home buyers heading interstate.
According to a recent survey of 1028 first home buyers by comparison site Finder, one-in-five are searching for their first property in a different state to where they currently reside.
The report found a quarter of first-home buyers from NSW are likely to consider buying property in another state, far more than those living in Queensland (19 per cent) and Victoria (17 per cent).
“Some are looking at real estate in other parts of the country where prices are more affordable, with many feeling the pressure to buy while interest rates are low,” Finder home loans spokesperson Sarah Megginson said.
The impact of COVID-19 has also caused a spike in demand for regional properties as residents consider a more laidback lifestyle, she said.
Home values in March showed the biggest monthly growth in 32 years, adding to the strain of putting together a home deposit.
According to research by Homeloans.com.au, a third of all Australian mortgage holders took five or more years to save for their deposit. Even then, the deposit is often not enough.
The study found at the standard loan-to-value ratio of 80 per cent, a $100,000 deposit would secure a property worth $480,000 in NSW and Victoria, even though median home prices in Sydney and Melbourne are $896,000 and $718,000 respectively.
It’s a situation Mr Brophy was familiar with while house hunting in Sydney.
“There was always uncertainty of when you could buy in Sydney. By the time you got the 20 per cent deposit, house prices had gone up, so it was like this unachievable goal,” he said.
Median home prices in Brisbane, Perth and Darwin are lower, making it easier to buy property in using the same $100,000 deposit.
“The heat in the housing market has left many first home buyers anxious about getting priced out of buying their dream home. As a result, borrowers are looking to other solutions, such as the bank of mum and dad, to help them get a foot in the door,” Homeloans CEO Scott McWilliam said.
The mortgage provider this week launched a new product called Quickstart, allowing eligible borrowers to secure a home loan with a deposit as low as five per cent.