While the news from the COVID-19 coronavirus hasn’t largely been great for the world, it may have helped revive the great Australian dream for Australian first-home buyers, new research shows.
Nearly half of millennials looking to purchase a home believe the pandemic has helped them move closer to their property-buying goals, an ING-commissioned survey of about 1000 prospective home buyers shows. A third intend to enter the housing market before 2022.
The Australian dream is geared towards home ownership, with aspiring owner-occupiers accounting for three quarters of young property buyers. One in 10 want to take a share in the investment property market, while 8 per cent have their eyes on flipping houses for profit.
ING’s Head of Home Loans Julie-Anne Bosich said young Aussies are using the economic environment to their advantage.
“What this research suggests millennials and Australians in general haven’t given up on the great Australian dream of owning their own home, they’re just re-thinking how they go about getting there and re-evaluating where they might want to live,” she said.
“It suggests many people, especially millennials are being savvy by taking advantage of record low interest rates, government assistance and a weakened housing market to get on the property ladder.”
How millennials are approaching the challenge of home ownership
Millennial home buyers are tapping into the property market slump and COVID-19 lockdowns to get their foot on the property ladder, the ING study indicates, with nearly 60 per cent reallocating money for planned travel expenses to saving a home. Almost 40 per cent have started a side hustle for extra income and 36 per cent have moved back in with parents to save rental costs.
Aside from living on a budget, millennial home buyers are also reportedly prepared to readjust their expectations on where they would consider living to enter the property market sooner. Half of those surveyed were willing to sacrifice inner-city living for a home on the city fringes and outer suburbs.
Some have given thought to alternative home ownership strategies, with more than 20 per cent intending to buy a smaller property in a cheaper area and rent it out until they can afford a more desirable home to live in.
While one in 10 would not mind buying a property with a friend or family member to buy a home sooner, 60 per cent plan to purchase with a partner and 22 per cent want to buy solo.
Millennials may even be making smaller changes to their usual lifestyle to own a property sooner. About half are prepared to cut back on personal shopping, while 42 per cent will dine out on fewer occasions and almost a third will reduce their sessions at the pub. A quarter will go on fewer dates and one in five will cancel their gym membership.
These strategies may prove to pay off, with property prices falling in recent months. Real estate values dropped by 0.7 per cent nationally, and 0.8 per cent across the combined capital cities in June, the latest CoreLogic data shows. It marks the second consecutive month of housing price falls following COVID-19.
For property hunters looking for a bargain, Melbourne has led price declines nationally, dropping by 1.1 per cent in June to a median value of about $680,000. The city became the worst capital city performer since COVID-19 hit, according to CoreLogic.