A frustrated home seeker has revealed how working seven days a week in two jobs, while living with her partner’s parents, still hasn’t been enough to help her save a deposit fast enough to buy a property in Sydney.
She’s among a rising number of younger buyers reporting the deposit hurdle for a property is proving too high to climb, with PropTrack data showing new buyers have to spend twice as much of their income on deposits as those in the 1980s and 1990s.
First homebuyer Ashley Van Deyk, 25, and her partner have spent the past four years scrimping every dollar they could to save a 5-10 per cent deposit while living with her partner’s parents.
She has had to work two jobs, seven days a week while saying no to date nights and social events.
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First home buyers are facing huge deposit burdens as interest rates climb.
But despite working hard and living frugally, the pair have needed to adjust their expectations around whether they can afford a freestanding home near family in the Northern Beaches.
It’s a story told time and time again by Millennials, who face a deposit hurdle far bigger than their predecessors.
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PropTrack data shows new purchasers currently face the least affordable upfront costs since 1984, the earliest year with available records.
Scraping together a 20 per cent deposit on a NSW home at the current median price requires 160 per cent of the average annual income, close to double what it was in the 1980s and 1990s.
The Northern Beaches has been in high demand during Covid.
While government grants and exemptions have reduced the deposit burden for some first home buyers, purchasers like Ms Van Deyk haven’t been able to use them because of the price caps in place.
“When we have kids, we want to be close to family,” she said.
“Houses here are not in that cap.”
“Last year, there was nothing on the Beaches below $2m.”
130 Prince Alfred Pde, Newport sold for almost $3m at the start of the pandemic.
Having a strict budget with little wriggle room has also made it hard to compete with other buyers.
Last year, they found themselves constantly missing out on property because the market was so hot.
“You just always seem to be just shy of the one that you want because someone else does have a little bit more money and that makes all the difference,” she said.
The younger generation are being priced out of the Northern Beaches. Picture: John Appleyard
She said the rising cost of living and slow wage growth made it difficult to navigate the fast moving property market, in contrast to what her in-laws experienced in 1994 when they bought the family home.
“They would have been younger than I am now when they bought their beautiful home in Manly Vale,” Ms Van Deyk said.
“The cost of living is higher and the wages aren’t high enough to compensate for that.”
“I think it’s 10 times harder now.”
This Narraweena house was one of four properties listed for sale in the suburb when it sold last year.
Her partner’s parents purchased their house directly from the owner after seeing it advertised in the local paper. They said this was common practice in the 1990s.
“It was a direct sale. The owner said, ‘I want this’, they offered it to them and it was that simple,” Ms Van Deyk said.
While her in-laws paid as much as 23 per cent interest at one stage, the banks didn’t impose purchasing caps like they do now – another factor that has restricted Ms Van Deyk’s search.
She and her partner went from being able to borrow seven times their income to being able to borrow six times their income when APRA introduced measures to curb lending growth last year.
Ashley Van Deyk says saving a large enough deposit is a challenge. Picture: Tim Hunter.
“This massively reduced what we were able to borrow,” she said.
She said the Northern beaches was slipping out of reach for younger first home buyers.
“If you worked really hard, by the time you were 21 you could own a home (in the 90s),” she said.
“Unfortunately now, I don’t think by the time you are 21 or 22 you can own a stand-alone home in the Northern beaches without help.”
The Northern Beaches is a beautiful but expensive area in Sydney.
She said it has been challenging to make sense of all the different housing affordability measures touted over the last 8 months.
“It’s been the craziest time for over the last eight months for anyone who decided to pick up their bags and go, ‘I want to do this’. There has been so much change so quickly.”
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