Opportunities for first home buyers

A recent report released by the Commonwealth Bank using information compiled by RP Data shows the opportunities for first home buyers are actually more wide spread than most would have thought – first home buyers just need to know where to look and what to look for.

Using the average first home buyer loan funding amount from the Commonwealth Bank we can determine a reasonably accurate proxy for what the average first time buyer is spending on a home across the major regions around Australia (CBA have a dominant market share for home lending in Australia).

Based on the CBA funding data, first home buyers are taking out mortgages ranging from an average of $250,833 in Hobart up to $336,339 in Canberra.   Once you add on 15 per cent (based on an 85 per cent loan to valuation ratio) we can start to determine the average purchase price for first home buyers in each region.

The purpose of the exercise was to demonstrate exactly where first home buyers could have purchased a property over the second half of 2009.  During that time period there were almost 41,500 properties transacted within plus or minus 10 per cent of the average first home buyer price – that’s about one fifth of all settled transactions.

Within the capital cities there are still plenty of options for first home buyers to purchase a home within ten kilometers of the CBD.  Only 6 per cent of house sales within the average first home buyer purchasing range were within 10km of the CBD.  However 38 per cent of opportunities within the apartment and townhome sector were within 10km of the capital city CBD’s.

This finding highlights that most first home buyers who want to live close to the city are likely to be buying into a medium to high density dwelling rather than a detached home.

First home buyers looking to buy further from the city are advised to focus their attention towards areas that are well serviced by public and private transport options and that provide a comfortable level of amenity such as shopping facilities, schools, health care and social destinations.

The complete report is available at the Commonwealth Bank web site within their home loans section, providing detailed commentary as well as complete sets of tables for all capital cities and other areas around the country.

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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