Taking the next step on the property ladder

There might be a new baby on the way. A new job in another city. Or the kids may have moved out and the house is suddenly too big as retirement beckons. It’s a situation many Australians face.

"According to the ABS data there are now nearly 6.2 million homeowner householders in Australia. This creates a huge pool of people who are potential changeover buyers.”

Whether renovating, moving or potentially becoming a property investor, there are a range of decisions to be made before taking the next step. And beyond the ‘what’ and the ‘where’, there’s also the ‘how’ of managing finances to consider.

This often-unheralded part of the market is important. Helping people face these hurdles and complicated choices – particularly as affordability and cost of living challenges continue to bite – will be crucial.

At ANZ we are helping to arm customers with tools like our Next Home Calculator and home buying planning and budgeting guides, to help them make more informed decisions and to feel empowered on their home buying journey.

Who are changeover buyers?

The Australian Bureau of Statistics defines “first home buyers” as those who’ve never owned a home. The ABS also has a specific category to describe homeowner households where at least one of the current owners had previously owned or purchased a home. They are known as “changeover buyers”.

According to the ABS data there are now nearly 6.2 million homeowner householders in Australia. This creates a huge pool of people who are potential changeover buyers.

While they are getting older, first homebuyers still tend to be between 25 to 34 – a whopping 56 per cent. But ABS stats show changeover buyers stretch into a variety of age brackets.

At the younger end, 12 per cent of changeover buyers are aged from 25 to 34 while 26 per cent are aged from 35 to 44 years. A further 22 per cent are aged 45 to 54 years, 16 per cent are aged 55 to 64 years, and 24 per cent are aged 65 years and over.

While buying a home is the biggest investment for many people, we often forget it is an investment made to suit our lives – and one that transforms over time.

When the ABS took a closer look at this group in a 2019-20 report, they found wanting a bigger or better home was a key reason for households with people aged 35 to 44 to move (17 per cent).

For households with residents 65 years or over, the main reason for moving was downsizing (22 per cent) or to be close to family and friends (13 per cent).

Affordability and supply challenges

The affordability challenges for first home buyers also impact those trying to make their next move. The ANZ CoreLogic Housing Affordability Report found national housing values rose 7.2 per cent in the last year.

One of the more promising trends for buyers in 2023 was an increase in new sale listings after historic lows. However, Australia faces longer-term issues with housing supply, owing to a slowdown in building approvals for new dwellings and delayed completions across the construction sector.

Migration can also influence affordability and supply, with Australia experiencing an unusually high level of net overseas migration, reaching a record 454,000 in the year to March 2023.

The data also showed changes to the number of people sharing households in 2024. The pandemic period saw a notable drop in average household size, but now the average number of people per household may rise in response to affordability and supply constraints. 

And for those considering renovating or building, the national Cordell Construction Cost Index suggests the cost to build a house has risen 25.6 per cent since March 2020, adding further constraints to supply.

Understanding the financial options

Given the housing market outlook, some home owners may understandably question whether they are in a financial position to afford the next home to meet their needs.

For first home buyers, the biggest hurdle is often saving for a deposit. The ANZ CoreLogic report found the time to save a 20 per cent deposit has climbed to 10 years nationally.

Changeover buyers may be able to meet deposit and other upfront costs through savings, proceeds from selling their house or if they’ve built up equity in their existing home. But it can be difficult to understand the different options.

Considering housing supply issues and the likely trend towards more people under one roof, renovating the current home might seem more appealing. But it can also raise questions around building costs and how to finance them.

We recognise this large cohort of changeover buyers needs access to information and tools to help alleviate some of the unknowns – which can make them feel more confident before engaging with a lender.

We are here to help them find their next step in the Australian dream of having a suitable place to call home.

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Shannon McMahon is Managing Director of Home Loans at ANZ.