RAMS First Home Buyers Pulse Check Survey 2013

Transcription

1 RAMS First Home Buyers Pulse Check Survey 2013 Australian attitudes and behaviours towards buying their first home August 2013 Strictly Embargoed: 12:01am AEST, 23 August 2013

2 Contents Highlights Methodology Key Findings....7 Demographics RAMS Contacts

3 Highlights

4 Highlights Property purchases are being increasingly delayed to within the next 12 months, with only one in eight First Home Buyers (FHBs) intending to buy within the next three months. 3 in 4 FHBs feel now is a good time to buy because it is a buyer s market with low interest rates one of the main influencing factors. Affordability is still among the top triggers for purchasing a home although the proportion of FHBs entering the property market for this reason has considerably declined. Avoiding paying rent is now the top driver for entering the property market. Property prices, saving a home loan deposit, and finding the right location are the main barriers cited. The influence of low interest rates is substantially higher than in 2012 although 3 in 4 would still buy regardless of interest rates and the majority would put the extra money back into the mortgage should interest rates continue to decrease. FHBs generally have a long way to go on their deposit and the percentage of household income allocated towards house deposit has generally decreased this year. Increasingly sacrificing lifestyle and relying on government grants are the two most common ways FHBs will acquire funds for deposit. FHBs also cite seeking a second job, selling shares and properties as their way of acquiring funds for their deposit. One of the greatest challenges to saving deposit for a home loan is the high cost of living in Australia. Others complain about uncertain employment and not making enough money to even pay the bills. Presumably due to affordability, NSW/ACT FHBs are much more likely than those in other states to turn to family support to raise a deposit. FHBs prefer to either buy a brand new home or build their own home. Realistically speaking though, a large majority end up looking for an established property instead. 4

5 Methodology

6 Methodology An online quantitative survey approximately 50 questions, was developed by CoreData and RAMS. The survey was conducted between 24 June and 8 July A total sample of 600 First Home Buyers (FHBs) who are intending to purchase their first property in the next 12 months were recruited from the CoreData panel. The full details of the sample demographics can be found at the appendix. All data was compared by year (vs. RAMS FHB sample of 500 respondents), state groups and other demographical information where possible. The existence of significant differences have been outlined throughout the report indicated with the notation (p<0.05). 6

7 Key Findings

8 An increasing number of FHBs are renting An increasing proportion of FHBs are renting (76.0% vs. 69.2% 2012, p<0.05) while slightly fewer are living with their parents (18.6% vs. 24.0% in 2012, p<0.05). Which of the following best describes your current living situation? BY Trend Renting Living with my parents Living with other family members Boarding Other % 8

9 FHBs are delaying their purchase FHB respondents are increasingly likely to delay their purchase, with 72.8% intending to purchase their first property within the next 12 months (vs. 66.3% in 2012, p<0.05). Only 12.8% are seeking to buy immediately within the next 3 months. Are you intending on purchasing your first residential or investment property in the next 12 months? By Trend % Yes, within the next 3 months Yes, within the next 6 months Yes, within the next 12 months 9

10 3 in 4 FHBs think now is a good time to buy Three in four (75.0%) respondents think it is a good time to buy a property now, continuing perceptions of favourable conditions observed last year. Those who think now is a good time to buy a property believe it is a buyer s market with current low interest rates and stable economy. Some respondents are availing of the government grant while others are financially able to buy a property at the moment. Those who think now is not a good time to buy complain that the property prices are too high and the economy is not stable enough. Others believe prices will continue to go down so they choose to wait until the market becomes more favourable to them. Do you think it s a good time to buy a property now? BY Trend % Yes

11 Triggers for entering the market Avoiding paying rent is the top trigger for entering the property market (47.7%). While affordability is still among the top triggers for purchasing a home, the proportion of FHBs entering the property market for this reason has considerably declined (47.3% vs. 66.2% in 2012, p<0.05). Respondents are increasingly more likely to purchase their first property because of interest rates (36.1% vs. 27.2% in 2012, p<0.05) but less likely to do so due to property prices (38.4% vs. 48.2% in 2012, p<0.05). Understandably, younger people are much more likely to be waiting to get a reliable job and the desire to avoid paying rent increases steadily with age (p<0.05). What are the triggers for you to decide to enter the property market for the first time? BY Trend Stop paying rent** Being able to afford it i.e. save deposit and make repayments Property prices Interest rates Reaching a certain age where I thought it was time Finding the right place Government incentives (First Home Owners Grants)** Getting a reliable job Having children Getting married Help offered from others e.g. family *Multiple answers allowed **New options added in 2013 Other % Yes 11

12 Affordability the biggest barrier for FHBs entering the market The top three barriers for entering the market are affordability (51.7%), saving for a deposit (51.2%), and finding a place in the right suburb (50.0%). There are significantly fewer respondents this year who are hindered by concern about the economy (22.8% vs. 27.2% in 2012, p<0.05) and interest rates (19.8% vs. 26.8% in 2012, p<0.05). What are the greatest barriers for you to enter the property market right now? BY Trend Property prices i.e. affordability of the type of places I am after Saving for a deposit Finding a place I like in the right suburb Uncertainty around my future earnings However, FHBs are more likely to be delayed by uncertainty around their future earnings (32.4% vs. 24.8% in 2012, p<0.05). Concern about the economy Interest rates i.e. expected burden of repayments Affordability weighs more heavily on the concerns of metropolitan FHBs (p<0.05). Lack of supply (there are less available houses to buy in the market)** Other *Multiple answers allowed **New options added in % Yes 12

13 More than 4 in 10 will buy their first home with a partner Nearly all FHBs (97.5%) require a home loan to purchase their first home. Do you intend on taking this loan by yourself or jointly with other people? BY Trend Of those who anticipate taking a loan, close to half (47.5%) intend to do so jointly with their partner while four in ten (39.4%) intend on taking the loan on their own. I intend on taking the loan jointly with my partner I intend on taking the loan myself I would like to take the loan jointly with another but don t think this is really an option for me I intend on taking the loan jointly with a friend I intend on taking the loan jointly with my parent I intend on taking the loan jointly with my sibling I intend on taking the loan with others (e.g. family member, colleague) n = 475 (2012), 581 (2013), respondents who will require a home loan to make their first property purchase % 13

14 FHBs more likely to fix their home loan A split of fixed and variable rate is still the most desired mortgage arrangement (41.1%). This year however, FHBs are more likely to opt for a fixed interest rate loan (31.2% vs. 22.0% in 2012, p<0.05), likely reflecting sustained low interest rates. Which of the following best describes the mortgage you intend to obtain? BY Trend % Consequently, respondents now have a lower propensity to take out a variable interest rate loan (27.7% vs. 35.0% in 2012, p<0.05). 0 A split of fixed and variable rate Fixed interest rate Variable interest rate 14

15 FHBs are allocating less savings to mortgage repayments FHBs are allocating less income for mortgage repayments this year, with the proportion of respondents expecting to save less than 20 percent of their after-tax household monthly income towards mortgage repayments increasing to 22.4% from 15.0% last year (p<0.05). Only 3.4% are confident that they can pay off their mortgage within 5 years. More than 5 in 10 think they will only be able to pay off their mortgage at the end of its term. What percentage of your total after-tax household monthly income do you expect to direct towards paying your mortgage? BY Trend 40 % Less than 10% % 20-29% 30-39% 40-49% 50% or more 15

16 FHBs prefer properties for sale than auction Most respondents are looking at properties that are for sale or by negotiation (79.1%) as opposed to auction (14.3%) or private sale (6.5%). Are most properties you are looking at being sold by 3 in 10 FHBs (30.9%) are likely to try to buy their first property before it goes to auction while close to half of the sample (46.5%) take a neutral stand on this. 100 % For sale/ by negotiation Auction Private sale not through an agent 16

17 More than 3 in 10 FHBs are influenced by low interest rates The influence of low interest rates has considerably grown this year with 32.2% now saying low interest rates have moderately to strongly influenced their decision to look for their first property (vs. 21.0% in 2012, p<0.05). However, three in four FHBs (75.2%) would still be looking for a property if interest rate levels were not as low as they are now. How strongly has the current low mortgage interest rates influenced your decision to look for your first property? BY Trend % Not influenced at all Somewhat influenced Moderately influenced Strongly influenced 17

18 Less than half of FHBs are influenced by Government grants A large majority of respondents (77.1%) are aware of Government incentives and grants. Two in five (42.7%) of those aware of these grants believe it would not affect their choice at all, while 18.5% think this would encourage them to purchase a new home to live in. How will this impact your decision to enter the property market? BY Trend It won t affect my choice at all It will encourage me to purchase a brand new home to live in It will make it harder for me to purchase the type property I had my eye on i.e. not a brand new home It will pressure me to buy a home (before they cancel the grant) It will encourage me to purchase a brand new home for investment purposes because I don t have to live in it to get the grant I will build my new home** 2.8 Other % **New option added in 2013 n = 403 (2012), 460 (2013), respondents who are aware of Government incentives and grants for first home buyers 18

19 FHBs are in the early stages of saving for a deposit Half (49.3%) of the sample have been saving for one year to less than five years. 34.6% of FHBs have been saving for less than a year, indicating they are still in the early stages of their savings plan. The percentage of household income allocated towards house deposit has decreased this year, with 54.5% saving less than 20% of their income (vs. 44.6% in 2012, p<0.05). At least 13.3% keep 40% or more of their income for their house deposit (vs. 20.2% in 2012, p<0.05). What percentage of your household income are you putting towards your house deposit? BY Trend % Less than 10% % 20-29% 30-39% 40-49% 50% or more

20 Most FHBs save their deposit via high interest savings accounts The most common means of saving for a home loan deposit is still via high interest savings account. How are you saving for your home loan deposit? 60.4 High interest savings account 52.7 One of the greatest challenges to saving deposit for a home loan is the high cost of living in Australia and many are not willing to sacrifice their current lifestyle. Others complain about uncertain employment and not making enough money to even pay the bills. Standard savings/transaction account Term deposit Selling things I own e.g. car Acquired from windfall e.g. inheritance, payout Other *Mulitiple answers allowed % Yes 20

21 FHBs are making lifestyle sacrifices to save for a deposit Sacrificing lifestyle and relying on government grants are still the two most common ways FHBs will utilise to acquire funds for deposit, increasing slightly from last year (65.9% vs. 61.2% and 54.9% vs. 50.2%, respectively, p<0.05). Close to three in ten respondents are likely to live at home with their parents to save (28.0%) or seek family support (26.7%). FHBs also cite seeking a second job, selling shares and properties as well as sacrificing their current lifestyle as their ways of acquiring funds for their deposit. How likely are you to utilise the following to acquire the funds for your deposit? BY Trend % Likely (7-10) Sacrificing your lifestyle Government grants Living at home with parents to save Seek family support to help gain a deposit 21

22 Home vs. investment property The vast majority of FHBs (81.2%) intend to have an owner-occupied residential property first (virtually unchanged from last year s 83.4%). Interestingly, single respondents are more likely to be interested in owning an investment property first (26.3% vs. 18.8% of the total sample, p<0.05). % Which do you intend to own first? BY Trend Half (51.3%) of the sample prefer to buy an established home, a quarter (25.9%) opt for a brand new home and a further 22.8% would like to build their own home Investment property Owner-occupied residential property 22

23 Good value is most important to FHBs The most important factor in deciding where to buy property is good value, scoring 7.5 out of 10. Proximity to work or children's schooling (6.7) lifestyle (6.3), quiet street (6.0) and proximity to transport (6.0) complete the top five important factors. Emotional connection, having a view, being an It suburb and prestige location are the least considered factors, suggesting that most FHBs tend to prioritise more rational drivers than emotive ones. How important are the following factors in your decision on where to buy property? Good value (i.e. good cost to quality ratio) Proximity to work or children s schooling Lifestyle Quiet street Proximity to transport, shop or other infrastructure Investment gain potential (i.e. booming/up and coming) Cheap Typical inhabitants of the area Emotional connection 4.2 With a view It suburb (i.e. currently very popular to buy in) Prestige location Average Ranking Score (1-10) 23

24 FHBs prefer function over feature When it comes to features wanted for their first home, FHBs seem to be opting for more functional features with a minimum of two bedrooms topping the list (5.0 out of 10). Far behind are having a garage, a lot of natural light, minimum of two bathrooms and a garden (each scoring at least 2.0). At the bottom of the list are nice-to-have features such as swimming pool, fireplace and wooden floor. This suggests most FHBs aim to buy a no-frills property, something that s more functional than fancy. What are the top three features your first home have to have? A minimum of two bedrooms A garage A lot of natural light A minimum of two bathrooms A garden Build in wardrobe A laundry area A balcony/terrace Solar panel Wooden floor A fireplace A swimming pool Other Average Ranking Score (0-10) 24

25 Demographics

26 Demographics Gender Age Female years old and below Male years old TOTAL years old years old and above State/Territory TOTAL NSW & ACT Area NT & Tas Qld The capital city of my state / territory SA A regional centre Vic A rural area WA TOTAL TOTAL Investment Portfolio Household Income I have no investments $50,000 or less $50,000 or less $50,001 to $75, $50,001 to $150, $75,001 to $100, $150,001 to $250, $100,001 to $125, $250,001 to $350, $125,001 to $150, $350,001 to $450, $150,001 to $200, $450,001 to $550, $200,001 to $250, $550,001 to $650, $250,001 to $350, $650,001 to $750, $350,001 or more $750,001 to $1 million TOTAL More than $1 million to $3 million More than $3 million to $5 million More than $5 million Total

27 Demographics Employment Occupation Self employed Managers and administrators Employed full time Professionals Employed part time Associate professionals Engaged mainly in home duties Tradespersons and related w orkers Professional unpaid w ork Advanced clerical and service w orkers Retired Intermediate clerical, sales and service w orkers Not employed at present Intermediate production and transport w orkers Student Elementary clerical, sales and service w orkers Other Labourers and related w orkers TOTAL Homemaker Other Education TOTAL Primary Living Situation Part of high school Completed high school Living alone (never had children) Diploma or certificate qualification (inc Trades) Living w ith flatmate(s) (never had children) Degree qualification Living w ith parents/siblings (never had children) Postgraduate qualification Living w ith partner only (never had children) TOTAL Living w ith your children (under 18 years) at home Living w ith your children (over 18 years) at home Relationship Status Living w ith your children (both over and under years) at home Single Children have all left home Living w ith partner/married Other Separated/divorced/w idow ed TOTAL Other TOTAL

28 Demographics Employment Occupation Self employed Managers and administrators Employed full time Professionals Employed part time Associate professionals Engaged mainly in home duties Tradespersons and related w orkers Professional unpaid w ork Advanced clerical and service w orkers Retired Intermediate clerical, sales and service w orkers Not employed at present Intermediate production and transport w orkers Student Elementary clerical, sales and service w orkers Other Labourers and related w orkers TOTAL Homemaker Other Education TOTAL Primary Living Situation Part of high school Completed high school Living alone (never had children) Diploma or certificate qualification (inc Trades) Living w ith flatmate(s) (never had children) Degree qualification Living w ith parents/siblings (never had children) Postgraduate qualification Living w ith partner only (never had children) TOTAL Living w ith your children (under 18 years) at home Living w ith your children (over 18 years) at home Relationship Status Living w ith your children (both over and under years) at home Single Children have all left home Living w ith partner/married Other Separated/divorced/w idow ed TOTAL Other TOTAL

29 Contacts

30 Contacts For further information, please contact: RAMS Public Affairs, Melanie Monico or For customer enquiries, please contact: call 13 RAMS ( ) or visit RAMS.com.au RAMS Financial Group Pty Ltd ABN AR Australian credit licence