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Devastating reality facing millions of home buyers

A composite image of a person holding $50 notes and a view of Australian property in the form of houses living a street on an overcast day.
First homebuyers are concerned about overpaying for a property. (Source: Getty)

Property prices across the country are falling but that’s not actually enough to help first home buyers get into the market.

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.

The 2022 Finder First Home Buyers report highlighted the growing gap between wages and house prices as one of the main challenges being faced by today's first home buyers in saving a deposit.

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.”

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