Cri­sis over for buy­ers who get into the home mar­ket


Cut­ting down on hol­i­days and week­end drinks with friends to keep up with the mort­gage on his first home wasn’t al­ways easy for ac­coun­tant Hadi Prayoga.

But he doesn’t re­gret the sac­ri­fices that en­abled him to get into the Syd­ney prop­erty mar­ket and build wealth in the city’s hous­ing boom, in­stead of pay­ing rent that he sees as “dead money”.

Mr Prayoga, 30, is part of a gen­er­a­tion of post-cri­sis home buy­ers that the Re­serve Bank sin­gled out this week as be­ing in bet­ter fi­nan­cial shape than renters once they man­aged to take the plunge.

The RBA ac­knowl­edged wor­ries about ris­ing lev­els of house­hold debt — even as po­ten­tial in­ter­est rate rises loom that could put pres­sure on stretched mort­gage hold­ers — while also high­light­ing sur­pris­ing bright spots in first-home buy­ers’ fi­nan­cial health.

Those who bought their first home be­tween 2008 and 2014 were more likely to be sat­is­fied with their fi­nan­cial sit­u­a­tion than renters, the RBA said in a re­port ti­tled “The Prop­erty Lad­der af­ter the Fi­nan­cial Cri­sis: The First Step is a Stretch but Those Who Make It Are Do­ing OK”.

Post-cri­sis first-home buy­ers were also more likely to feel sat­is­fied with their fi­nances than those who bought their first home be­fore 2007, the RBA said.

They were less likely to make late mort­gage re­pay­ments or ask for fi­nan­cial help than first-home buy­ers in pre­vi­ous years.

Af­ter buy­ing his two-bed­room apart­ment in Maroubra, in Syd­ney’s south­east, with the help of his par­ents in 2009, Mr Prayoga worked hard to pay down his debts to the bank and his fam­ily.

He is glad to have made the de­ci­sion to buy rather than rent, and now to fund a start-up busi­ness he is sell­ing his home through Cen­tury 21.

“I grabbed this op­por­tu­nity when I was 22 and now that I need more cap­i­tal I have it,” Mr Prayoga said. “I was quite lucky be­cause I was be­ing guided by my fa­ther … Now that I’m pay­ing off my own mort­gage I don’t see it as dead money.”

First-home buy­ers have been com­ing back into the mar­ket more re­cently af­ter east coast state govern­ments of­fered stamp duty sav­ings, with ABS data show­ing the pro­por­tion of loans to firsthome buy­ers hit its high­est point in four years in July.

Cen­tury 21 agent Nick Pap­pas has no­ticed a rise in first-home buy­ers “gen­uinely look­ing”. “With what the gov­ern­ment’s been do­ing that’s prob­a­bly helped them to get into the mar­ket­place,” he said.

The RBA ac­knowl­edged the dif­fi­culty of get­ting into the prop­erty mar­ket. “Our re­sults sup­port the hy­poth­e­sis that higher hous- ing prices have crowded out po­ten­tial first-home buy­ers from the mar­ket,” re­port au­thors John Si­mon and Tahlee Stone wrote.

The bank warned that firsthome buy­ers were tak­ing on more debt than in the past as hous­ing prices had out­paced in­comes.

The RBA found that some buy­ers who re­ceived help from their par­ents were more likely to face cash­flow prob­lems than those who had the dis­ci­pline to save the money them­selves.

Aus­tralia’s house­hold debt is one fac­tor in fo­cus for the RBA as it pre­pares to lift in­ter­est rates from his­toric lows. Rates are likely to start ris­ing around the De­cem­ber quar­ter of next year, said AMP Cap­i­tal chief econ­o­mist Shane Oliver and this will “have a fur­ther damp­en­ing im­pact on the prop­erty mar­ket”.


Hadi Prayoga out­side his Syd­ney apart­ment: ‘Now that I’m pay­ing off my own mort­gage I don’t see it as dead money’

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