A celebrity auctioneer has sparked renewed discussion on housing affordability by urging young Australians to reduce spending on dining out and entertainment to save for a first home. Damien Cooley, a well-known figure in the Australian real estate market, suggested that many young people are overspending on social activities, hindering their ability to save for a property deposit.
This sentiment echoes a debate that gained prominence a decade ago when demographer Bernard Salt famously questioned whether young Australians could afford luxuries like $22 avocado toast if they aspired to homeownership. Cooley stated that he frequently advises young individuals to prioritize saving, suggesting that parents could also play a role by matching their children's savings.
Cooley recommended that first-home buyers consider purchasing in more affordable regional areas, such as Maitland in the Hunter Valley, rather than focusing on highly competitive markets like Sydney's eastern suburbs. He noted that the market has become more challenging for first-time buyers, and recent policy changes intended to improve affordability may have inadvertently benefited those who already own property.
Recent data from the Real Estate Institute of Australia (REIA) indicates a rise in first-home buyer activity, with 30,129 new loan commitments recorded in the June quarter, an 11% increase from the previous quarter. First-home buyers represented 36.3% of all owner-occupier commitments during this period. The average loan amount for these buyers saw a slight decrease of 0.6% over the quarter, settling at $610,063, though it remains 10% higher than in the same quarter of the previous year.
REIA president Jacob Caine acknowledged the increase in first-home buyer participation but cautioned that broader affordability issues persist. He emphasized the need to assess housing and taxation policies for their impact on rental supply, investor confidence, and new housing development, particularly amidst higher interest rates.
Federal Housing Minister Clare O'Neil defended recent government tax changes related to property, stating they are designed to help first-home buyers achieve what she termed a "virtual rite of citizenship." She explained that the intention is to create a more level playing field for first-time buyers, contrasting this with a system where young people are taxed to subsidize investors buying multiple properties.
Property prices had begun to decline before the May budget, influenced by earlier interest rate hikes. However, the government's decision to reduce negative gearing and capital gains tax concessions has reportedly accelerated this downturn, with home values falling in 93% of suburbs. Despite these market shifts, a Westpac Home Ownership Report found that 55% of Australians believe the recent tax changes will positively impact aspiring homebuyers, with 70% of Gen Z respondents expressing optimism.
The report also highlighted that affordability pressures are altering buyer behavior, with three-quarters of first-home buyers willing to explore locations they hadn't initially considered. Home values have seen declines across most Australian capital city suburbs over the past three months, with Sydney experiencing a 7.1% drop from its February peak, bringing the median house price to $1.5 million. Research director Tim Lawless observed that the market softening is now widespread, indicating a buyer's market despite current buyer hesitancy.