The thrill of the purchase may be pushing some first home buyers to splash more cash than they planned.
In fact, more than a third of first home buyers (37 per cent) end up exceeding their budget, according to Finder’s First Home Buyer Report 2022.
The research found 8 per cent of recent first home buyers paid more than $100,000 over their budget, and a further 8 per cent paid between $50,000 and $100,000 over.
Just 20 per cent managed to buy below their intended budget.
Sarah Megginson, money expert at Finder, said underquoted property prices were part of the problem.
“Underquoting is where a property is listed at a price lower than what it’s worth to bait buyers,” Megginson said.
“It’s illegal but it does happen, particularly in the case of auctions, where underquoted prices can attract more buyers and lead to a bidding war.”
Megginson said an agent was responsible for proving the property was worth its listed price, and were required to let you know if the price estimate changed.
Close to half of buyers from New South Wales (41 per cent) and Queensland (40 per cent) blew their budgets, compared to 31 per cent of Victorian buyers.
Megginson said high property prices were also to blame for busting buyers’ budgets.
“We’re in a market where prices have skyrocketed, and wages can’t keep up with that level of growth,” she said.
“Many have been forced to spend more than they hoped. Unfortunately this will have consequences down the track on buyers’ ability to service their loans.”
Finder found those with higher budgets were more likely to go beyond that initial limit.
More than half of buyers (53 per cent) with a budget above $1 million paid more than they had intended, including 28 per cent who spent more than $100,000 over their budget.
That’s compared to 37 per cent of those with a budget between $500,000 and $1,000,000, and 29 per cent of those with a budget of less than $500,000.