The tough road to buying a first home is over for Nicole Govan, 25, and boyfriend Jacob Lumsden, 23, who will be unpacking at their new Pascoe Vale address this weekend.
The two have been living with Ms Govan’s family in Aberfeldie and have spent about 20 Saturdays at open for inspections and arranging private viewings on weeknights.
After stretching their budget from the low $400,000s to the higher end of the range and missing out at two auctions, they secured a two-bedroom townhouse a few kilometres from their ideal location.
It is a familiar story for many Victorian first home buyers, who are taking on record high mortgages to pay for soaring house prices in Melbourne.
First-timers took out an average loan of $347,600 in July, up $9200 from June. They now make up 11.7 per cent of the market, according to the Australian Bureau of Statistics.
The number of young buyers breaking into the market this year has also jumped 6.4 per cent compared to the same period in 2014.
Domain Group senior economist Andrew Wilson said the rising proportion of first home buyers came as investor finance commitments fell.
With the banks moderating lending to landlords, he said first home buyers were facing less competition from investors.
Buyers advocate Cate Bakos has seen first-hand the results of the Australian Prudential Regulation Authority’s measures to restrict the growth of investor lending to no more than 10 per cent a year.
‘The investors have absolutely tapered off. We even had a few clients on our books who have either downgraded their brief due to borrowing constraints or they’ve put their plan on hold because the APRA changes have meant that they can no longer borrow,’ she said.
At the same time, Ms Bakos said, she was fielding more inquiries from first home buyers, who were also having more success because many investors had left the market.
Despite rising house prices, she said, there were still plenty of options for young buyers within 15 kilometres of the CBD for smaller properties, such as a townhouse or by going further west.
Though Ms Govan and Mr Lumsden’s decision to buy in the north wasn’t affordability driven, they found themselves being priced further out.
‘We’ve both been brought up around this area; we want to be close to the city and be close to all our friends and family,’ said Ms Govan, who works in childcare.
‘We’d prefer to be in Essendon, Aberfeldie or Moonee Ponds but, because it’s a lot more pricey around that that area, we just had to go to the outer suburbs.’
Other first home buyers such as Chris Morris, 30, and wife Jennifer are looking south-east and have chosen to buy off-the-plan.
After renting in Toorak for two years, they have paid a 10 per cent deposit for a three-bedroom townhouse in Cedar Wood’s Jackson Green urban renewal development in Clayton South.
The couple had plans to buy a house they could do up in the south-east, and attended about 15 auctions and at least 60 open for inspections.
Mr Morris said they realised houses within their price range would have needed a significant amount of work, so they decided to buy a new home expected to be built in two years.
‘We have a deposit ready, but we could save up for longer with that extra two years,’ the policy adviser said.
‘And when it is built, we won’t have to do any renovations or changes to it.’