First-time home buyers face a double whammy as rents and home prices rise


Ms King works as an advice and client service manager at online investment adviser Stockspot and has used the service herself to invest.

“We help a lot of clients save for a real estate deposit through investing, it’s hugely popular,” she said.

Australia Institute chief economist Richard Denniss said it was a “huge challenge” trying to buy a home in the face of rising rents and rising house prices, highlighting the tax advantages offered to investors.

“No one should be surprised that investors who drive up house prices dramatically increase the rents they charge. That’s the plan,” he said.

“I think house prices are too high and it would be nice if they came down, but no politician wants to say that out loud because two-thirds of Australians either own a house or are paying for one.


“We cheat young people. We pretend to try to solve a problem, but for two-thirds of the Australian population, they don’t feel a problem.

Mr Denniss called for reform of the capital gains tax cut – a position now rejected by both main political parties – and for policymakers to reconsider the full exemption of the family home from the capital gains tax.

He also suggested rethinking public housing.

“Defence Housing Australia, for example, provides low-cost housing to tens of thousands of defense force personnel. Why couldn’t we do this for teachers, nurses and older workers? »

Mortgage broker Aaron Christie-David sees first-home hopefuls trying to save while part of their income is spent on rent and house prices rise.

Some tenants who find it difficult to save are getting help from the Moms and Dads Bank.Credit:Peter Rae

“That’s what I call being caught in the rental trap,” said the managing director of Atelier Wealth. “It hurts their confidence…and it feels like the goalposts are always moving because by the time they’ve saved a bit more, the prices have gone up.”

To speed up a deposit, more shoppers are receiving gifts from Mom and Dad’s Bank, he said.

He advised first-home applicants to consider whether paying off their student debt would increase their borrowing capacity and to consider lenders who offer to waive mortgage insurance for those who have saved 15% of deposits instead. the usual 20%.

Buyer’s agent John Carew also sees parental assistance as a “very common” feature of the market now, as baby boomers advance their transfer of wealth to overpriced offspring.


Some would-be buyers are living with their families to keep costs down, but both scenarios — living at home or watching how much their rent bill is each month — motivate potential buyers to find their own homes, he said.

“There seems to be a bit of upward pressure on rents right now in Sydney,” said the founder of Mayfield Property Buyers. “They say, ‘Rent money is dead money, we just want to get into the market’.”


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