Who are these Melbourne First Home Buyers!?

We develop land in WA & QLD (working on VIC projects too). Just had a call from the boss in Melbourne saying that first home buyers in the South East, areas like Clyde & Cranbourne, are buying land for around the $350k mark and then spending another $200k or more on a house.

Who are these first home buyers that are able to afford $550k for their first home!? We don't see these people in WA!

I'd love to get some feedback from VIC based mortgage brokers or other professionals dealing in this space.

Cheers! Lyndon

 

Purchasing a home for $550k is easily done for a couple who are both on modest incomes and have some savings for the deposit. Not having consumer debt helps a lot as well. I see this scenario quite frequently. The hardest part for most first home buyers is getting a deposit together.

 

Hi

Yes the info your boss has given you is absolutely correct. Out towards Cranbourne/Clyde/Officer is exactly as you have been informed. Maybe the budget is extending closer to $600k now.

Regards,

alicudi

 

A couple both are on modest income or a single income household with close to six figure salary can afford it. There is no stamp duty for 600k and below property. FHOG for new built. That why new estates with price around $550-650k are hot cakes in MEL

 

Bank of mum and dad?

 

That budget is easily achievable with 2 incomes -- not surprising.

And no, don't need to come from the bank of mum and dad.

 

Absolutely, done this 18 months ago. FHOG, Stamp duty concession, and $12,000 deposit from a credit card. - Average Double income, mid 20s

Built a 300sqm, 2 story house on 550sqm in Northern GC. Not the best investment but as a young first home buyer technically putting no $$ down its a no brainer.
Spent $550k
Valued 2 months ago at $650k and bought again in Brisbane.

Wasn't hard to do at all

 

as someone who bought their first home in WA and now lives in melbourne, heres my 2c:

• 550k is dirt cheap. there are many FHB's buying up to $1m (Aussies too.. this isn't foreign money)
• in VIC, people genreally buy homes later. I bought my first in WA at 19. many FHB's here are 30.
• There is no option in VIC. if you want a home, you need to pay more. In WA its not hard to get in the door in the $400s, so there is no reason to wait or pay more.
• As an older city, there is much more inheritence and family support here. I have a fair few colleagues using mum and dad capital to buy.
• People in VIC happily delay other parts of their life to buy a better house. Most of my WA mates had a house, 2 nice cars ($10k-40k ea), a dog, plans for kids, multiple trips to Bali and decent furniture in their mid-late 20's. I have friends in vic who are 30, house sharing, still driving "student cars" (if they even have a car) and going to the pub for cheap jugs of draft, but with $100k sitting in cash.
• I work in a mid-szie CBD based company, so naturally i've spoken with many FHBs in the last few years. A lot are couples with a joint income of ~$200-250k+ (not hard for two focused 30 year old professionals with 10 years in the workforce), and have spent several years saving. many move in with folks, none take overseas holidays. Typical spend if $600k-$1m.

Its a totally different way of life in VIC to WA, and accordingly, your concept of what a FHB is should be totally different.

 

Buying a first home in the SE area of Melbourne is not hard as mentioned by the posts above.

It is the FHB who are competing with the other buyers (FHB, mom and dads, investors) for the inner suburbs (~$1 million properties) that makes my head scratch.

Borrowing a million dollars to buy a property is ~$1100/week repayments.

You need to be a couple earning six-figures each to be able to comfortably service the loan. And it seems in Melbourne, there are a lot of these people or are Melbournians overleveraging themselves?

 

I know a number of people earn less than that (household income<180k, or even $150k) did it because they only saw the repayment amount with 4% interest rate and did not think about what if scenario.

 

At ~150k, when interest rate goes up to 6%, their mortgage would eat up 50-60% of their income (post-tax) and that is excluding all other living expenses (utilities, car, child care, schooling, entertainment, council rates, etc.)

However, I don't believe the majority of 150k-200k income couples will go out and take a $1 million loan. Or are they that reckless and like you said didn't think of the what/if scenarios?

 

I don't believe the majority is that reckless. But a not very small portion of buyers do not have a clear understanding of their financial situation,the risk of what if scenario and the buffer required.