Figures from ING Direct show the average age of first home ownership has jumped dramatically in the last decade, from 34.7 in 2005 to 37.7 in 2015. In Sydney, it’s 38.2.
With the average house price now sitting at $780,000 in Sydney and $576,000 in Melbourne, it’s no wonder many of us are putting off, or can’t afford to enter the property market until later in life.
But renters considered less financially secure in retirement than homeowners, is it worth taking the plunge in your 40s and 50s?
The great Australian dream?
Experts are divided – increasing rents and low interest rates are working to make home ownership more attractive, but banks can be reluctant to lend to older home buyers.
The standard term for a home loan is 30 years – so if you’re 50 now, you’d be blowing out the candles on your 80th birthday cake before it was paid off.
Instead most lenders offer a shorter term or ask for an “exit strategy” – proof you can make repayments after you stop working, such as evidence of other income and investments.
Mortgage broker Home Loan Experts says some banks even ask buyers for superannuation statements to prove they can pay off the debt.
There’s also the question posed here: do you still want to be saddled with mortgage debt into your retirement and beyond?
Planning for the future
There are benefits too. Main residences are exempt from the assets test for the Age Pension, putting more money back in your pocket.
And as we pointed out here last week, renters are at much higher risk of living in poverty on the Pension than homeowners.
If you’re already looking at downsizing, smaller properties are often more affordable too.
Of course, you do need the cash to break into our ever-rising housing market. The ABS has just revised the number of first-home buyers in Australia to even lower than it had stated, just 13.2 per cent in July.
According to Mortgage Choice’s annual First Home Buyer Survey, nearly 65 per cent of first home buyers who purchased in the last 24 months say they would have bought sooner if they had received more financial assistance.
Certainly it’s in the Government’s interest to make it easier for buyers of any age to step onto the property ladder – it will save them more in pensions when we all retire!