More young Aussies would buy a home with their mates: NAB
Friendship could be the ‘new frontier’ for how young Australians help each other get onto the tough property ladder, NAB research has found.
Buying a property with friends is becoming an increasingly common-sense compromise for how young Australians collectively get a foot onto the property ladder, a major bank’s research has revealed.
National Australia Bank (NAB) data released on Friday (27 January) indicated that 40 per cent of young Australians are considering buying a property with someone other than a romantic partner.
The big-four bank’s survey also found that aside from dropping their price range, buying with another person tops the list of compromises Aussies aged 18–29 are “prepared to make to get into the market”.
Interestingly, almost a third are willing to buy and rent the property out initially while 20 per cent indicated they are open to the idea of moving into a share house, it added.
The data was sourced from a NAB Economics survey conducted between November and December 2022 with Australians looking to buy a property.
Commenting on the results, NAB executive for home ownership, Andy Kerr, said younger people are getting creative when it comes to making their property dreams come true.
“Younger Australians aren’t letting meeting a partner or getting married later in life hold them back from owning a home now,” he explained.
“People are definitely looking at their options and casting the net wider when thinking about who they could buy with.
“Rentvesting — purchasing in one location and then renting in another — is another trend that is creeping up in popularity.
“Interestingly, our data shows that first home buyers aren’t being deterred from entering the property market, despite the market softening overall and rising cost-of-living. Buyers are just thinking outside of the box to make it happen.”
Get it all in writing
There were some notes of caution from Mr Kerr though as any partnership involving large amounts of money and joint partners could face future challenges.
Mr Kerr said regardless of who you were buying with, it’s important that you talk about how you’ll jointly save for a deposit, agree on the property, and meet ongoing costs.
“As buying a home is the biggest purchase most of us will make, it’s also worth considering getting a solicitor involved for additional comfort,” he said.
“From our perspective, we can give confidence around getting a fast home loan approval.
“Around 50 per cent of eligible NAB customers can now get a decision within 24 hours thanks to our simple home loans process.
“Around 30 per cent of those are getting unconditional approval within an hour and some within 15 minutes — that’s faster than getting your internet set up in the new home.”
Collective goals and compromises
The research also revealed other key insights such as that the most common compromise (41 per cent) buyers of all ages are “willing to make” is the amount they’re willing to spend.
Also, about one in three would trade off the size of the land, garden or outdoor space (31 per cent) while about 28 per cent would give up their preferred location, it found.
Finally, one in 10 “aren’t willing to budge at all” on their wish list, the survey showed.
A good time to buy — or not?
Only recently did CoreLogic data document the slide in property values in the past year since the Reserve Bank of Australia (RBA) started its first cash-rate hike last May to temper the burgeoning house markets across Australia.
As CoreLogic economist Kaytlin Ezzy confirmed: “The market downswing doesn’t discriminate, with only a small proportion of suburban areas riding a wave of positive growth among the sea of declining values.
“The downswing has meant buyers who were previously priced out of some markets might start to see opportunities appearing, particularly in cities where larger downturns have been recorded such as Sydney, Melbourne, Brisbane, Hobart and Canberra.”
Ms Ezzy also noted that rising interest rates, which have pushed serviceability buffers and increased mortgage repayments, have offset many of the benefits presented by declining values.
As the NAB data highlighted, respondents open to friends banding together to purchase their first home might be their best way to share the load of the rising interest rate environment.