Average age of Aussie first-home buyers closer to 40 than 20, research reveals

By Stephanie McLean

Buying your first home is no mean feat, particularly in Australia where housing markets have been ranked among the world’s most unaffordable. It might explain why the average age of Australian first-home buyers is closer to 40 than 20. 

A new study by Money.co.uk looked at the age of first-time buyers across 25 countries and found that Australians are, on average, 36 years old when buying their first home.

It positions Australia in the middle range of Money.co.uk’s first-time buyers index, with Iceland and Belgium holding the youngest average age of 27 years old and Switzerland showing the highest average age at 48.

Chief economist at realestate.com.au Nerida Conisbee said the age of first-home buyers anywhere in the world is linked to the cost of housing.

“In Australia property is very expensive. It does take a long time to get a deposit together and it does take more time to be able to afford a loan,” Ms Conisbee said.

Experts say the cost to buy and transact on property in Australia is also why homeowners are holding onto property longer than a decade ago.

According to Money.co.uk, the average budget (based on an average income of about AU$75,000 per annum) for a first-time property in Australia is about AU$339,000 yet the average price for a two-bedroom unit is about AU$431,000. This leaves first-time buyers in a deficit of about AU$92,000 when trying to buy their first home.

In Switzerland, the average property price for a two-bedroom unit is about AU$909,000, but with an average budget (based on an average income of AU$92,000) of about AU$414,000, the average Swiss first-home buyer would end up in a large deficit of AU$495,000, the research showed.

Comparatively, Icelanders earn the highest annual salary out of the 25 countries, earning about AU$95,000 per year. It puts the country’s first-time buyers well within budget to buy their first home, with a two-bedroom property costing on average AU$381,000.

First-home buyers are waiting for their ‘dream home’

Melbourne-based buyers’ advocate Cate Bakos said she had noticed first-home buyers starting later over the past two decades.

“Many are studying for longer, travelling more, living their best life as renters for longer, putting off children for longer and, more importantly, jumping into ‘dream home’ ownership, as opposed to ‘stepping stone’ home ownership,” Ms Bakos said.

“Many first-home buyers are now approaching it with a view to earn more, borrow more and buy the dream home, as opposed to buying an initial home.

“So many are disheartened that they can’t live in a character home in the inner ring, so rather than buy smaller or further out, they just remain renting or living with parents for longer.”

More women are breaking into the market alone

Ms Bakos said single women are represented well in first-home buyer numbers, citing government incentives as a key driver for women going it alone.

“First-home buyer incentives have enabled single incomes to be able to step forward without the burden of finding additional savings. I’ve helped quite a few women who have also had initiatives such as the deposit saver scheme aiding their purchase,” Ms Bakos said.

Melbourne-based events and communications coordinator Christina Bettiol, 34, purchased her first home in Thornbury in April this year. She said she was keen to make the most of government incentives to get a foothold in the property market as the cost of housing in Melbourne was a significant barrier for her.

“To be able to find a comfortable, spacious home near the city you need to be looking at prices well above $600,000, but being on a single average income my only options were to move far away or purchase a small apartment in the city. Lenders Mortgage Insurance was another factor as well and it was tough to save a deposit,” Ms Bettiol said.

“I managed to avoid paying stamp duty as I purchased a one-bedroom apartment close to the city for under $600,000, but I unfortunately missed out on a place for the 5% deposit scheme and ended up paying LMI.”

Ms Bettiol said young people need more help from the government to get into the property market.

“A lot of young people want to purchase homes instead of renting but it is tough to gather a deposit and then the cost of Lenders Mortgage Insurance and stamp duty is a turn-off.

“A lot of people are fortunate to get an inheritance, which does help to set them up for their first home, but the government needs to assist the younger generation to purchase property, which in turn would make them feel like they have a sense of responsibility and achievement in life for all their hard work.”

Will the average age of first-home buyers continue to rise?

Ms Conisbee said the average age of first-time buyers in Australia will likely fall in the coming year due to the huge amount of government incentives, such as HomeBuilder, offered to first-time buyers during the COVID-19 pandemic.

“We have seen record levels levels of first-home buyer activity since the start of the year. All the government incentives have given more money [to first-home buyers] than they otherwise would have got if the pandemic hadn’t occurred,” she said.

“I think this year, the average age will come down. But then when we start to see withdrawal of a lot of the incentives, I think it’ll go back up again.”

Ms Bakos said proposed changes to responsible lending guidelines and the return of investors will make things quite challenging for first-home buyers next year, which will likely see the age demographic continue to climb.

“Combined with COVID-related incentives to stimulate purchaser activity, I think we will see investors return. First-home buyers have had the luxury of four-plus years of limited investor competition, but I do feel that is about to change,”

Originally published as Average age of Aussie first-home buyers closer to 40 than 20, research reveals