Rising rents make buying sooner more appealing for first home buyers
Rising rents are changing the way first home buyers view the federal government’s First Home Guarantee, with new Cotality analysis showing that entering the market sooner could outweigh the long-term cost of a higher loan.
Since 2020, median rents across Australia have risen about $200 a week to $669 – an increase of more than $10,000 a year. For many buyers, that makes years of saving for a 20% deposit less attractive.
Cotality head of research Eliza Owen said the savings in rent could offset the extra interest paid on a 5% deposit loan.
“In cities like Sydney and Brisbane, the rental savings far outweigh the savings on lender’s mortgage insurance.”
The analysis found that in Sydney, buying sooner under the scheme could cut more than 12 years off the time needed to save a full deposit. At a rental rate of $801 a week, that’s roughly $502,000 in rent avoided over that period – a figure that highlights just how costly time in the rental market has become for first home buyers.
About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.