First homebuyers are a key cog in the property market wheel, and many investors are pinning their hopes on interest rate drops and increasing rents encouraging them to jump into the market in force. However, it has been suggested that ‘mortgage apathy’ is leading an increasing number of potential first homebuyers to drop out of the property race.
According to new research from insurer AAMI, over a third of young renters said that they were happy renting and had no plans to buy a property. Additionally, when compared to 2010’s results, 8% fewer respondents in this year’s survey said they were feeling the pressure to buy a house.
So what’s driving the rise in what the report has labelled ‘mortgage apathy’? It claims that a “double‐whammy” of housing prices and global uncertainty around property prices could be to blame for the trend – with younger city renters preferring to hold tight, rather than make what is likely to be the biggest financial decision of their life.
“Twenty or thirty years ago average house prices in Australia were three to four times the average salary, whereas today we are looking at a multiple of seven times. Saving for a deposit is increasingly out of reach for young people today, and if they are going to get a foot on the property ladder they want to wait till they know they are investing at just the right time,” said AAMI corporate affairs manager Reuben Aitchison.
“We know that people who own their own home tend to take a greater sense of responsibility for their dwelling. But this is a new trend and we will watch with interest to see how longer‐term renting affects the way tenants treat their dwellings and therefore the effect on risks faced in and around the home.”
Other key findings included:
- 31% of city renters aged 18 to 24 report feeling pressure to get a mortgage, compared to 39% in 2010.
- 35% of city renters aged 18 to 24 say they are happy renting with no plans to get a mortgage, compared to 29% in 2010.
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