While the first step on the property ladder can be a bit of a stretch, those who make it are, on average, better placed.
Young Australians who bit the bullet and bought their first homes since the financial crisis – in the face of galloping prices – are more financially secure than previous generations and show fewer signs of being vulnerable to a downturn, the Reserve Bank of Australia has found.
In a potentially controversial study into what it describes as the “bittersweet” reality of home ownership, the Reserve Bank concludes that while saving a deposit “is a stretch” in today’s market, for those who make the step, they are better placed to pay off their loans than prior to the crisis.
The findings challenge the oft-heard warnings that recent first-home buyers are taking on more debt than they can afford, and will be left badly exposed in a downturn.
Households that manage the transition from renting to ownership – which the RBA says is becoming more difficult – end up “more financially secure than earlier cohorts” of first-home buyers.
“The underlying desire to become a first-home buyer has not changed since the financial crisis. However, people’s ability to, or comfort with doing so, has been affected.”
Carl Thompson – Commercial Lending Specialist, Strategic Investor Group