First home buyers may be compromising more to get onto the property ladder

Shadows of homes growing in size

Figures from a study conducted by Members Equity (ME) Bank has highlighted a number of trends in the still very busy property market. The data shows over two-thirds of first home buyers are accepting the need to compromise on certain requirements to buy a property, as well as the rise in solo applicants.

With a surging property market, we’re seeing new trends in home loans and home ownership that reflect the affordability of getting a foot in the door. The research from ME Bank can help us observe these shifts in the tendencies of first home buyers and gain an understanding into how consumers are adapting to the housing market during the COVID-19 pandemic.

What are first home buyers compromising on?

With the price of property and land rising, it may be self-explanatory that the most common compromise first home buyers are willing to make is to settle for a smaller property than preferred. Only a third of respondents in the property market under 40 years’ say they’ve purchased their ‘forever home’, proving that many first home owners are buying their first home as a stepping stone.

Financial support measures understandably ranked highly among respondents as well, with choosing a less-than-preferred area or home in need of renovations also recording significant results.

Top first home buyer compromisesPercentage of Buyers
Purchasing a smaller than preferred property35%
Purchasing with less than 20% deposit which means paying Lenders Mortgage Insurance27%
Getting financial support from family / having family act as guarantor26%
Purchasing in a less preferred area25%
Purchasing a property that needs renovations or repairs24%
Buying an investment property to rent out before buying my first home16%
Buying 'off the plan' to purchase a property not yet built13%
Buying property with family and friends11%

In a housing market that continues to surge, the research indicates first home buyers may be reassessing their selection criteria when it comes to purchasing. While it may be more expensive to purchase than ever before, getting a foot in the door isn’t impossible.

A Rise in Solo Applicants

A further trend uncovered by ME Bank highlights a rise in solo applicants applying for home loans, with single applicants accounting for 38% of all loan applications received by ME.

The increase in solo buyers comes despite property prices increasing to all-time highs during 2020, with the average loan size for single-mortgage applications rising 1% to $405,755.

Single females represented 49% of solo-applicants, down 1% from the prior year, while single males were more likely to enter the property market earlier, purchasing at an average age of 32 compared to 34 respectively.

Research from 2018 indicated the average age of buying into the property market was 35 for both women and men, meaning many Australians are entering the market younger.

ME’s Head of Home Loans and Personal Banking Claudio Mazzarella recommends the following tips for saving a deposit:

  • Record and analyse your expenses to explore how much and where you could be saving.
  • Prepare a budget and stick to it.
  • Pay off your outstanding debt on credit cards or personal loans.
  • Look around for saving accounts with high and consistent rates.
  • Set up automatic deposits into a savings account.
  • Look for ways to boost income and cut back on expenses such as living with family.

Compare home loans from a broad range of lenders over at our home loan comparison hub, or read up on how much you could borrow.

  • Home loan comparisons on Mozo - last updated 2 December 2023

    Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
    • Home Variable Rate

      Owner Occupier, Principal & Interest, Refinance Only

      interest rate
      comparison rate
      Initial monthly repayment
      6.15% p.a. variable
      6.15% p.a.

      Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

    • Offset Home Loan

      Package, Owner Occupier, LVR<60%, Principal & Interest

      interest rate
      comparison rate
      Initial monthly repayment
      6.14% p.a. variable
      6.39% p.a.

      Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

    • Flex Home Loan

      Owner Occupier, Principal & Interest, LVR <80%

      interest rate
      comparison rate
      Initial monthly repayment
      6.19% p.a. variable
      6.43% p.a.

      Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.

    • Mozo Expert Choice Badge
      Variable Rate Home Loan Special Offer

      Package, Owner Occupier, Principal & Interest, LVR<80%

      interest rate
      comparison rate
      Initial monthly repayment
      6.14% p.a. variable
      6.51% p.a.

      Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.