Homebuyers who can afford a house in Australia is only 1 in 10 people

Only one in ten first home buyers who want to buy a home can actually afford it.

The Australian Housing and Urban Research Institute released data on Thursday revealing the startling statistics.

The survey found that potential buyers would also find it difficult to meet mortgage payments after interest rates have increased 11 times since April last year.

It’s because the study found that decades of rising house prices have prevented young Australians from fulfilling their dreams of owning a home (pictured, a stock photo)

The Reserve Bank of Australia raised interest rates by a further 0.25 percentage point in early May, bringing the cash rate to an 11-year high of 3.85 percent.

The research found that decades of rising house prices have prevented young Australians from fulfilling their dreams of owning a home.

One expert said that especially “the rich” and “those with much higher incomes” are the ones who leave the pack behind when scoring their own property.

The study, which examined different housing financing conditions and people’s ability to buy a first home, said 11 percent of the population can afford the prices.

And the rest are struggling to make ends meet amid the Reserve Bank of Australia’s decision to raise its official price target by 25 basis points this month from 3.6% to 3.85%.

About 89 percent of the population would struggle to even save for a down payment, the regular payments on their home, or both, the study found.

Lead researcher and Professor Rachel Ong ViforJ from Curtin University said only certain types of people can buy a home.

“The ones with much higher incomes, the ones who usually come from wealthier families, and of course they usually have full-time jobs,” she told brisbane times.

“But it would essentially be people of higher socioeconomic status.”

This is despite efforts by successive governments to offer schemes such as low deposit thresholds to ease the burden of buying an expensive home.

“We know that successive governments have tried to introduce relief schemes, but it wasn’t very helpful because if they did, we wouldn’t have these statistics that we found,” Ms Ong ViforJ said.

The research said the federal government’s Help to Buy scheme, which begins in July, would be nearly twice as helpful to low-income first home buyers as the Home Guarantee program.

It works by allowing buyers with a down payment of at least two percent of the property’s purchase price to obtain a loan with a co-payment from the government.

Lead researcher, Curtin University economics and finance professor Rachel Ong ViforJ said successful governments have tried to introduce aid schemes, but it has not been particularly helpful

The number of Australians owning a home has fallen from 71 percent to 66 percent in 25 years, the study said.

The Home Guarantee Scheme allows eligible buyers to buy or build a new home with a five or two percent down payment – ​​without the need for mortgage insurance.

The study said that both schemes will most likely stimulate more demand, but an increase in available housing is needed to meet quotas.

A third of the rising house prices in Aussie have been caused by falling interest rates between 1994 and 2017, the study found.

As the population grows, rising wages and lack of housing make up the other two-thirds of the rise in prices.

The number of Australians owning a home has fallen from 71 percent to 66 percent in 25 years, the study said.

Ms. Ong ViforJ suggested some solutions to overcome the crisis resulting from the prolonged period of low interest rates.

She said “painful” tax reforms would have a real impact, but admitted the damage was already done because house prices were “unfeasible” for most Australians.

The school of accounting professor added that rising rates will not be enough to lower property prices amid the country’s rapidly increasing population growth and massive housing demand.

Michael Fotheringham of the Australian Housing and Urban Research Institute said Aussies will be in it for the long haul and there are no quick fixes in sight.

Professor Rachel Ong ViforJ in economics and finance at Curtin University said ‘painful’ tax reforms will have real impact

But she admitted the damage was already done as house prices were ‘unfeasible’ for most Australians (pictured, a stock photo)

He said the massive rise in house prices will have a long-term effect as wages struggle to keep up.

It’s because a massive influx of cashed-in Chinese buyers is driving up prices on everything from luxury homes and brand-new units to large tracts of land.

Long-standing Covid-19 lockdowns in China were finally lifted late last year, sparking an exodus of those seeking a better life in Australia.

These immigrants can buy a family home with four or more bedrooms for the same price as a unit at home in Shanghai.

The market share of foreign buyers in NSW recently rose to its highest level in eight years of 16.2 per cent in the first quarter of 2023, compared to 6.7 per cent in the previous quarter, according to the latest NAB Residential Property Survey.