The latest Bankwest/Mortgage and Finance Association Home Finance (MFAA) Home Finance Index has showed a record number of first time buyers are looking to their families to help raise a deposit for their home. More than 23 per cent of first time buyers are hoping their families can help them secure a house of their own (up from 15 per cent in March 2010).

Renters are also finding it difficult to make the shift from renting to home ownership. More than 50 per cent of first time buyers currently in rented accommodation feel stuck in a rental rut, up from 38 per cent in March 2010.

Additionally, there has been an increase in people who think rent is too expensive, up 67 per cent from 63 per cent in March. There has also been a decrease in people who are happy to keep renting to maintain their lifestyle, down to 19 per cent from 23 per cent in March 2010.

"There has been a strong shift in the desire of first time buyers to get onto the property ladder since the March Bankwest/MFAA Home Finance Index," said Vittoria Shortt, Bankwest Retail Chief Executive. "Rising rents have shifted many young peoples' focus back to home buying.

First time buyers also changing their expectations, and are prepared to make trade-offs to enter the property market, like looking further away from the city centre or for a smaller property. They are also looking for family help with deposits now that the First Home Owners Grant is lower."

The Index revealed a range of compromises first time buyers are prepared to make to break into the real estate market, including:

  • Nearly 25 per cent are continuing to live at home to save money for a deposit.
  • Approximately 55 per cent believe the current economic climate has led them to look for cheaper property.
  • More than 42 per cent said they are looking for a smaller property.
  • Nearly 20 per cent are prepared to move from the city to the suburbs.

Additionally, more than 53 per cent are also putting money aside in the event of economic instability, signalling first time buyers are preparing for the various economic scenarios they may face.

Home owners remain cautious about rising house prices and interest rates

The desire to purchase property amongst current home owners has also changed since March 2010. There has been a significant decline in people interested in purchasing property, with only 34 per cent of respondents actually feeling it's a good time to buy a new home - compared to 44 per cent previously.

Many home owners stated they were concerned about the level of debt needed to upgrade. In fact, more than 26 per cent of these people were so worried about the amount of borrowing needed to upgrade, they decided to put their purchase plans on hold.

"Many home owners are opting to live in their houses for longer, renovating along the way to improve comfort but avoid high debt levels," said Phil Naylor, Chief Executive Officer, MFAA.

"We are seeing mortgage holders set the bar when it comes to savings. On average they save close to 17 per cent of take home income on a regular basis. Furthermore, more than 20 per cent regularly save more than 23 per cent of their take home income," added Mr Naylor.

Overwhelmingly home owners said they would like to put more money aside in the event the economic situation worsens, a figure up to 55 per cent compared to 35 percent in March 2010.

Other money saving strategies being considered by home owners looking to move include:

  • Looking for an established property (38 per cent)
  • Lowering the mortgage (35 per cent)
  • Looking for cheaper and smaller properties (35 per cent and 29 per cent respectively)

In terms of geographical preference, more home owners shifting properties are keen to move closer to the city, 38 per cent, up from 24 per cent in March 2010.

This contrasts considerably to the profile of first time buyers who are moving further out of the CBD to secure a piece of real estate.

According to Mr Naylor; "It is becoming clear that many home owners already in the market are looking to move closer to the cities, while first time buyers are moving out; this trend is reflecting the affordability of and access to housing in metropolitan cities across Australia."

The survey polled more than 1,000 people across Australia and is the seventh Index taken since 2004.