Entering the market sooner could also reduce long-term costs by $1 million, lender says
A new type of home loan is enabling first-home buyers to purchase property without a deposit, potentially allowing them to enter the market up to a decade earlier than the national average.
According to lender Empower Money, no-deposit finance is appealing to a broad range of buyers, from those in their twenties to individuals in their fifties, as many Australians continue to face challenges saving for a deposit.
Current figures indicate that it takes the typical first-home buyer around 10 years to save for a deposit. During this period, property prices can increase significantly. In Sydney, for example, the average house price has risen from $1 million to $1.692 million over the past decade. Empower Money estimates that, over the same period, a prospective buyer would spend approximately $320,000 on rent while the property value could increase by nearly $700,000.
“It’s definitely time for change,” said Peter Khoury (pictured top), executive chairman at Empower Money. “People are struggling with the housing crisis and inflation. Home ownership shouldn’t just be for high income earners. People with solid incomes who meet serviceability criteria should be able to buy now, without a deposit, and start building equity.
“With rising property prices meaning even larger deposits are needed, first-home buyers are trapped in an endless cycle of saving. And it’s not just young people who are stuck in this cycle, but those in their forties and fifties too. A first-home buyer is behind by $1 million before they make their first mortgage repayment, when price rises and longer periods of paying rent are factored in.”
Empower Money, which offers a 105% home loan known as PowerUp Elite and covers both the purchase price and associated risk fee, reports that many of its clients are in their forties, often balancing rent and family expenses while trying to save.
The lender’s analysis suggests that buyers who use a no-deposit loan to purchase a $1 million Sydney property in 2015 and hold it for 30 years could see the property’s value reach $3.24 million by 2045, assuming a 4% annual growth rate. In contrast, a buyer who waits 10 years to save a deposit and purchases in 2025 would build less equity over the same period, missing out on a decade of capital growth.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
