What would you give up to raise a deposit?

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Would you give up eating out, holidays, your daily coffee or that pair of shoes that you’ve had your eye on in order to scrape together a house deposit? New research suggests that first homebuyers are drastically cutting back on life’s luxuries in order to get their foot on the property ladder.

According to a survey of 1,000 prospective first home buyers, carried out by the Mortgage and Finance Association of Australia (MFAA), eating out (35%) is the number one luxury that prospective first home buyers are missing out on in order to raise that deposit.

Holidays (21%) come in second, followed by activities with the family and children (15%), necessary items for the children (8%) and movies and DVDs (8%).

According to the MFAA, prospective home buyers are now saving more than ever – an average of around $15,500 per annum, or 16% to 23% of their take home income. With this aggressive savings pattern in force, around 38% of the survey respondents expected to buy a property within the next 12 months. 

Missing out on

%

Dinner out

35%

Holiday

21%

Activities with the Family & Kids

15%

Necessary items for kids

8%

Movies & DVDs

8%

Fun

7%

Pampering/Luxuries (manicure, facials etc)

5%

Hair cuts

4%

Spontaneous & sense of Freedom

4%

Coffee

4%

Feeling of burden - living to a budget/missing out

3%

Shoes

3%

Takeaway/Takeout

2%

Source: MFAA

Commenting on the findings, the MFAA CEO Phil Naylor has called upon the RBA to cut the official cash interest rate at its next meeting in May.

“Our members are telling us that established borrowers and first home buyers are doing it tough out there and a rate cut is necessary to restore confidence in the property market, one of the economy’s key economic drivers,” he said.

“The hospitality and tourism sector plays a very important part in the economy and clearly it is missing out on activity as consumers are forced to curtail their spending patterns in an effort to raise a deposit or indeed cover their mortgages. This is clearly a problem which needs to be addressed by the Reserve Bank”.

What would you give up to buy your next property? Have your say on our property investment forum.

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