First home buyer affordability is as good as it has ever been

One of oldest clichés in journalism is that they never let the facts get in the way of a good story. And we’re seeing that shallow principle in play daily as media hammer the myth that first-home buyers are being squeezed out of the market.

All the available facts say otherwise.

Last week two new reports were added to the great pile of evidence that affordability is particularly strong right now. Some of the regular indexes have affordability at its best in 10 years. The one published quarterly by the Commonwealth Bank and the Housing Industry Association showed further improvement in the September quarter, with all capital cities benefiting.

Financial ratings firm Canstar published research showing that while the national average mortgage is today four and a half times bigger than it was in 1990, affordability is much better today than then because interest rates are much lower and wages have risen. Repayments as a proportion of income are considerably lower than they were in 1990.

We can add that to the ABS report which found that average house prices, relative to average incomes, are today at the same level as they were in 1995; and to the affordability index published by the Adelaide Bank and the Real Estate Institute of Australia, which basically concurs with the Commonwealth Bank report.

The thing that appears to conflict with all that evidence is that first home buyer numbers are low at the moment. Far too many attention-seekers are leaping to the erroneous conclusion that the only possible explanation is that young people cannot afford to buy.

The real explanation has nothing to do with affordability. It has to do with choices. Many recent surveys have found that today’s twenty-somethings are not prioritizing home ownership the way previous generations did. They are opting for lifestyle and travel. Home ownership can wait.

The surveys indicate many young adults prefer to rent in an inner-city suburb rather than moving to the suburbs and taking on a mortgage. Some are renting in the city while getting on the property ladder by buying an investment property in a cheaper location, often a regional centre.

It’s a major demographic shift, similar to the one that has Australians delaying parenthood. We no longer live in a nation where young adults move automatically to marriage, children and a suburban mortgage.

But someone seeking a bit of media limelight can always generate some cheap publicity by declaring the ‘Great Australian Dream’ dead. Media will always run that and in a nation of 23.3 million people you can always found a twenty-something malcontent willing to have a public whinge about how hard it is to save a deposit.

Journalists seem to think we’re all desperate for news about the sad plight of the wannabe first home buyer. They apparently imagine Australians are gathered in pubs and homes across the country talking about nothing else. What else could explain their obsession for this story line?

I have to confess I’m not interested in first home buyers. Even at their peak they have never been a major force in real estate and their importance to the property market and to the nation is greatly over-rated.

Buying a first home today is what it has always been: really hard. It’s a massive commitment and you have to really want it. It takes compromise and sacrifice. If you want it badly enough, you’ll go get it. It has always been thus.

The nation offers everyone shelter. But no one has a divine right to own the shelter. And certainly no one has a right to achieve ownership in their dream location as a first purchase.

Terry Ryder is the founder of and you can contact him via email or on Twitter.


Terry Ryder

Terry Ryder

Terry Ryder is the founder of


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