Since 2002, residential house prices have grown by a whopping 276 per cent, while wages have increased by just 77 per cent.
In 2021 alone, house prices grew by 28 per cent, compared to just 1.5 per cent for wages.
And a massive 37 per cent of first home buyers admit to having gone over their intended budget.
Finder home loan expert Richard Whitten said it’s no wonder first home buyers worry about overpaying for a property.
“Buyers should always compare as many recent property sales as possible to get a good sense of what a fair price is,” Whitten said.
“But ultimately, you can't time the market.
“You're not really overpaying if you can find a home that suits you at a price you can afford.”
But, first home buyers overextending themselves may also have to do with their preference for property.
The report found that 70 per cent of first home buyers are looking for, or intend to purchase, a house over a unit.
The average first home buyer's budget is $749,000 while the median value of a house nationwide is $791,896.
Whitten said it is also important to first home buyers to consider the impact of rising interest rates when they set their budget.
“When setting a property budget, home buyers should use a loan repayment calculator,” he said.
“Instead of just putting in the current interest rate, they should work out how their repayments would change if rates rose again.
“The final quarter of 2022 is shaping up to be a very interesting time for first home buyers.”