Australia’s first-home buyers shacking up to afford a home

New research from St George Bank shows that today two-thirds of successful Australian first home buyers shack up with their partner, friends or family in order to afford that elusive first property.

“Two incomes are better than one, so it seems logical for buyers to team up with others if affordability is an issue to share the costs, including stamp duty and valuation fees,” says Ross Miller, general manager for retail banking with St George.

Teaming up: First-home buyers Michelle Moore and her boyfriend Luke Carr. Photo: Michelle Moore

The bank’s senior economist Janu Chan says it’s a trend that seems to be happening more and more, although no hard statistics have been done before on the numbers of people pooling their resources.

“It’s something we can only gauge anecdotally,” she says. “But with house prices rising, bigger deposits needed and first home grants not as generous as they once were, we’re finding it’s much more common for couples with dual incomes to buy rather than single people. And with record low interest rates, now is a good time to buy.”“We had a very transparent conversation, and made a property pre-nup saying we’d each take a certain percentage if we split up.”Michelle Moore, First home buyer

Michelle Moore and her boyfriend Luke Carra are members of that new generation deciding to buy together. As a corporate trainer in systems and procedures, Moore, 30, has a regular wage while Carra, also 30, is a musician, playing in Sydney band Caravana Sun, and has a more erratic income.

The pair bought a two-bedroom apartment in Sydney’s Cronulla for $710,000.

“He goes on tour and comes back with a stash of money, so he had more money for a deposit,” she says. “But then I have the regular income, so it was easier to get a mortgage. So it was something we decided to do together.”

The pair bought a renovated 1960s two-bedroom apartment in Sydney’s Cronulla for $710,000 and, so far so good. They’ve even added to the household with two adopted cats.

“But we did have a freak-out just as we were signing the contract, and thought, ‘It won’t be so easy to break up now!’” says Moore. “Then we had a very transparent conversation, and made a property pre-nup saying we’d each take a certain percentage if we split up.

The St George research found 66.1 per cent of 1003 Australian first home buyers surveyed who bought their home in the last 24 months purchased with their partner, friend or family, compared to 33.9 per cent of respondents who bought alone.

Its results were similar to those in a study carried out late last year by property sales agents LJ Hooker which found that younger buyers were overcoming the affordability challenge by splitting and sharing the cost involved in purchasing a property.

Mathew Tiller, head of research at LJ Hooker, says the first home buyer market is the sector most susceptible to affordability issues. “The traditional approach was always to find a partner, get married and then buy a home together,” he says.

“But these days, with affordability issues, particularly in Sydney and Melbourne, people are teaming up before they get married so they can jointly get a mortgage to avoid paying rent. In all circumstances, it is a good idea to have an exit strategy just in case things turn sour, or lifestyles change …”