People are using any way they can to gain an edge in the real estate market, as a new report revealed the barrier to home ownership climbed again this year.

Despite Geelong home prices falling throughout 2024, PropTrack’s Housing Affordability Report showed the cost of borrowing and paying off a mortgage became the biggest factor weighing on housing affordability in the state.

The report shows a median-income Victorian household could afford to purchase about 12 per cent of homes sold across the state in the past financial year.

RELATED: Friends with benefits: first-home buyers’ secrets to success

100s for sale: Geelong’s biggest buyers’ markets revealed

Renovation rewarded with $50K premium as first-time buyer ends 3-year search

---

And mortgage repayments on a typical new loan reached 33 per cent of the state’s average household income.

Saving a deposit did become easier, but it would still take six years.

But buyers are breaking through with support of government incentives, parental guarantees, gifts and early inheritances, or building with developers offering tens of thousands in rebates.

PropTrack senior economist Angus Moore said Victoria had the best blueprint to tackle affordability, with the state more advanced at building new dwellings on top of incentives that help people buy their first property.

Other policies have also resulted in more homes being listed for sale than has been seen in many years, creating conditions favourable for buyers in the market for more affordable homes.

But the next move to tackle affordability is saved for the Reserve Bank board, with money markets betting on not if, but when interest rates will fall, and by how far.

Geelong’s growth areas such as Armstrong Creek and Mount Duneed have been a haven for young homebuyers, with developers offering rebates and incentives that can be worth thousands. Picture: Brad Fleet

---

Mr Moore said a cut in interest rates should have an immediate impact in Victoria, where falling house prices has contributed to the slight easing in housing affordability.

“If we continue to see the sort of income growth that the RBA is expecting, and that we have seen in recent years, and interest rates start to ease, we’d hope to see affordability start to improve.

“It’s not going to get back to the sort of levels that we were seeing at the start of the pandemic, but hopefully things will start to ease a bit for what would be buyers,” Mr Moore said.

Geelong’s median home price fell 1.71 per cent in the three months to September with the $726,000 median price nearly 4 per cent lower than the same time last year.

PropTrack economist Angus Moore said Victoria has done a better job of building homes over the past decade than many other states.

---

The number of properties on the market is a factor in lower prices, with almost 3500 listed for sale across the Geelong region this week.

That’s the largest amount of homes up for sale in a decade, and more than 800 higher than the same time last year.

Gartland, Geelong agent Nathan Ashton said the market had swung in favour of young buyers.

He said turnkey properties, established homes that have been updated to a level that require little work from new owners, were the most popular.

In a market where ex-rental homes are flooding the market, that’s becoming more prevalent at lower price brackets.

Geelong real estate agent Nathan Ashton said young buyers see schemes to help them into the property market as a real bonus, but most want to find a home where most of the work is done.

---

“There’s definitely a lot of first-time buyers seeing those buyer schemes as a real bonus,” he said.

“You’ve got to remember to them what happens today is normal. So if they can get a reasonable property in good location at a reasonable price, with the assistance of the government scheme, they’re seeing the positives.

“They have probably been saving over the last few years because they’re trying to work towards growing a deposit, but not being able to afford to purchase something, whereas now everything seems to sort of be lining up pretty well for them.”

He said first-time buyers and people stepping up to their second home would continue to drive the market into next year looking at homes under $1m.

Geelong real estate agent Tiffany Simpson said the first step for new homebuyers should be with their bank or mortgage broker.

---

Hayeswinckle director Tiffany Simpson said buyers’ first conversations need to be with a lender.

“They really need to be in tune with their lender or broker as to what their borrowing capacity is, and then search within those suburbs,” she said.

“My daughter has purchased a property and her demographic was a home in Clifton Springs. It was within her affordable bracket. It’s not her forever home, but she’s in the market.”

Ms Simpson said buyer confidence is rising after six interest rate pauses, but borrowing capacity was being tempered by the cost of living, so some should be considering a townhouse or unit to get into the market.

Many young buyers are getting help from family to break into the market or choosing less expensive homes where they can add value over time.

---

“I just encourage first-time buyers to save for that deposit and make sure you get as much information as possible from your lender or broker and even your real estate agent.”

Geelong mortgage broker Matt Turner said more people were open to compromising as they targeted cheaper houses.

And more were prepared to wear the cost of lenders mortgage insurance in order to buy a home at a time they see good value, said Mr Turner, of GSC Finance.

“They might not necessarily have the 20 per cent deposit, but they’re seeing that opportunity so they want to take it,” he said.

“And we’re seeing a lot more parental support. Early inheritances, gifts, family guarantees, just anything that parents can do to assist kids or family members to get into homes.”

“I think we’re all aware once interest rates do start to decrease, then it’s going to get harder.

“I totally expect house prices to take off once we see that reduction in borrowing costs.”