- A survey by ING shows more than one third of millennials are saving to buy a home in the next three years.
- However, 61% of those surveyed were unsure how much money is required for a home deposit.
- They believed the average minimum they needed to save for a loan was just $76,000.
Getting a foot in the property market remains high on the list of priorities for Australian millennials.
But the results from a property survey commissioned by banker ING suggest the majority haven’t fully grasped what it would take to make that a reality.
The April study involved 1,000 Australians aged 22-37, equally distributed across age, gender and region.
More than a third said they’re saving to buy a home within the next three years.
That goal forms part of a broader ideal among millennials to set themselves up for the future, with 64% preferring to plan ahead rather than just live in the moment.
However, when it comes to the specifics of obtaining a home loan, 61% aren’t actually sure how much they need to save for a house deposit.
Of the remaining 39% who said they did know, the average deposit amount nominated was just $76,000.
On a loan-to-value ratio of 20%, a $76,000 deposit would buy a property worth $380,000 — and that’s not including stamp duty and other fees.
The figure seems low, given that CoreLogic house price data to the end of April had the median house price across Australia’s capital cities at $655,419.
The head of retail banking for ING Australia, Melanie Evans, told Business Insider it was hard to say with certainty why the deposit expectations of younger people were so low.
“This research finding might suggest that millennials just haven’t thought through the cost of entering the housing market in finite detail.”
Evans also highlighted separate results in the survey, which showed that only 63% of respondents had a specific savings plan in place to save for a house deposit.
She added that first home-buyers tend to enter the market in a lower price range, while prospective first home-buyers often rely on the advice of family and friends already in the market.
“As a result, their expectations may be based on historical experiences – rather than what we are seeing eventuate in some housing markets at the moment,” Evans said.
The millennials surveyed also demonstrated a distinct preference for space. More than 40% of respondents were eyeing off a three-bedroom home for their first purchase, with just 7% nominating a one-bedroom apartment.
And around two thirds said getting a foot in the door with property may mean buying in a less-established area that’s more affordable.
But based on the estimated loan amount derived from a $76,000 deposit, many millenials, particularly in and around the highly-populated east coast capitals, may have to look further off the beaten track than they expected.
As a guide, here’s how far you have to travel from every Australian capital’s CBD to find a house under $500,000.
“Millennials are thinking about their future and understand owning a first home might mean purchasing in an unestablished area, taking a longer commute and looking out for fundamentals rather than ‘cool’ areas,” Evans said.
“However it’s evident that they need help on how to go about saving for a deposit with many unaware of how much they need to save.”