Gen Y first-home buyers pessimistic about house prices but eager to get into the market: QBE LMI survey

Generation Y are savvy and sceptical and make up nearly half of the nation’s first-home buyers, according to QBE Insurance’s mortgage report.

The LMI Barometer found that 45% of the first-home buyers it surveyed are under 30 years old, and many borrow money family to help them onto the property ladder. In fact, 20% of this group lives at home while saving, which is up from 18% last year.

While dedicated saving is how 91% of first-time buyers gather their deposits, one in 10 confess to raising money through loans from parents. Indeed, 20% of this group has a guarantor for their loan – usually their parents.

The LMI Barometer found that 41% of first-home buyers have a household income of between $100,000 and $200,000. As a sector, they are also motivated to lenders with low deposit requirements.

“The average deposit for first home buyer respondents is $60,821, which takes 4.7 years to save and is well below the overall average deposit of $101,767,” the study found.

They are also more pessimistic than other groups, and 83% consider property to be overvalued, which includes 50% who think prices are ‘significantly overvalued’.

But the cynicism does not dampen enthusiasm to spend, with 44% of this group aiming to have bought a property in 12 months. On average Gen Y first-home buyers will borrow $372,259. On their way to that purchase, they do better research and rely on external advice more than other market segments surveyed.

More than half of the first-time buyers’ respondents believe that property prices will be stable or higher in 2012, which is down from the 73% who believed the same in 2011.

“First-home buyers have a fairly bullish outlook on property over the medium term, with 52% agreeing property prices will increase strongly over the next three years. This is ahead of the national average of 42%,” the report says.

Possibly due to fears about rising property prices, 39% of this group thinks it is more important to enter the market now rather than save for a bigger deposit.