Number of first home buyer loans decline in the ACT as Canberra's housing affordability declines further

Daniel Sudarto recently purchased a two-bedroom apartment in Greenway after spending four years saving for his deposit.

In that time, Canberra unit prices rose about 38 per cent, according to CoreLogic figures, but Mr Sudarto admits he didn't follow the rising prices closely. Instead, he focused on saving as much as he could.

"If I actually did my thorough research and was obsessively looking into the property prices, and the rate at which it was going up, then I would be so anxious," he said.

"My coping mechanism was actually just don't look [at the prices], just save up and then once you think you have enough money for at least 5 per cent or 10 per cent, then start looking around."

The latest Housing Affordability Report by the Real Estate Institute of Australia found 879 loans were taken out by ACT first home buyers in the December quarter of 2021. It represented a slight increase of 0.9 per cent over the prior quarter but a decrease of 12.5 per cent over the past year.

The average loan to ACT first home buyers reached $502,275 in December 2021, up 9.1 per cent on the year prior when the average loan was $460,199.

The report also revealed a decline in housing affordability overall in the ACT. The latest data shows the average ACT family would devote 27.5 per cent of their income to meet loan repayments, an increase of 1.8 percentage points over the year.

Real Estate Institute of Australia president Hayden Groves said housing affordability challenges are having an impact on first home buyer activity.

"You can see that there was a further decline in affordability to the December quarter, which is disappointing for those who are looking to get into their first homes," he said.

However, Mr Groves said the ACT remains relatively affordable compared to other states. In NSW, the average household spends 46.5 per cent on loan repayments.

"But we certainly acknowledge that it's not easy for people," he said.

Nathan Burraston of Francis Properties Kingston, who sold Mr Sudarto his apartment, said he engages regularly with first home buyers, many of whom rely on financial support from their parents to get into the market.

"If you were in a normal job with a fixed wage, where some sacrifices could have let you get in the market and take the first step on the ladder 10 years ago, that step doesn't exist anymore. If you look at Strathnairn, north-west of Holt, your entry-level, two-bedroom townhouse is $630,000. It's 250 to 300 grand dearer than it was 10 years ago," he said.

Part of Mr Sudarto's saving strategy was to make small changes to his lifestyle, such as cutting out takeaway coffee, wine and lunches. He also made use of federal and territory government grants, which exempted him from paying lenders mortgage insurance or stamp duty.

"I grew up being very frugal, that's just how my mum raised me. So it wasn't a struggle for me," he said.

Mr Sudarto said when he moved from Indonesia to Australia about 16 years ago, he often struggled to get by and at times found himself homeless. It motivated him to save up to one day own a property.

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"If it meant I didn't drink coffee for four years [or] wine for four years ... so be it. I think it's worth it," he said.

"Having that peace of mind that your income and every dollar that you earn, especially when you're a minority ... actually goes towards your own [home].

"But at the same time, knowing that interest rate might blow out of proportion is just a little bit scary."

While he believes housing unaffordability is close to its peak, Mr Groves said increased supply is required to solve the crisis.

"I think house prices and their growth will start to slow as the year progresses, which should in theory, open up a bit more stock for buyers, including first home buyers," he said.

"What we really want to see is the federal government coordinate with the states and their local governments to co-ordinate how supply is addressed throughout Australia."

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