Millennial homebuyers are having a significant impact on the property market as they lead the ditch-the-cities trend amid the pandemic, according to the latest McGrath report.
McGrath founder and executive director John McGrath said millennials have continued to find ways to adapt to the ever-changing market.
"Young family millennials, in particular, are joining the VESPA movement (Virus Escapees Seeking Provincial Australia) and moving away from the city centres," Mr McGrath said.
"Some are leaving the capital cities altogether for regional areas that not only offer affordable housing but also an escape from traffic and a time-poor, big city lifestyle."
The McGrath report showed that Australians between the 25-44 age bracket are the second-biggest cohort leaving capital cities during the first quarter of the year.
Sydney and Melbourne led the trend and lost a net 4,520 millennials during the quarter.
Regional NSW and regional Victoria experienced the largest net gain in millennial population.
Housing affordability challenges
Mr McGrath said contrary to the notion they are "entitled" and "lazy", millennials are actually hard workers and savers.
"Many entered the workforce during the Global Financial Crisis and many were in the middle of their careers when COVID-19 struck," he said.
Despite millennial's diligence in saving, the faster pace of growth in house prices make affordability still a huge issue.
For many millennials who have yet to make a first-home purchase, it would them take an average of 8.6 years to save for the typical 20% deposit requirement.
To adapt, millennials often turn to the bank of mum and dad.
Mr McGrath said many millennials are also jumping aboard the rentvesting trend.
Millennial homebuyers also had the support of state and territory governments in the form of first-home owner grants and stamp duty concessions.
These factors, along with the low interest-rate environment, have allowed first-home buyers to be active in the market.
Figures from the Australian Bureau of Statistics (ABS) showed that lending to first-home buyers as a share of the total lending to owner-occupiers has increased from the decade average of 24% in March 2019 to 30.4% to March 2021.
This, however, dropped to 27.7% due to the affordability constraints.
"Home ownership is still an important goal for tech-savvy millennials,” Mr McGrath said.
“Whilst many face uphill battles during the pandemic, especially those still studying or just starting out in their careers, it will doubtlessly make them even more resilient," Mr McGrath said.
Top spot for first-home buyers
A separate study from Hashching revealed where first-home buyers are finding their way onto the housing ladder as they escape the biggest markets.
Hashching CEO Arun Maharaj said Queensland has become a sanctuary for first-home buyers.
Toowoomba is the most popular postcode, where 20% of all first-home buyer transactions took place.
"With such a massive percentage of first home buyers choosing Toowoomba and its surrounds, the city can pride itself on creating the right mix of affordable housing, employment opportunities and transport to tempt first home buyers to start their journey there," Mr Maharaj said.
Here are the other first-home buyer hotspots in each state:
- St. Aubym
New South Wales:
- Devon Meadows
- Roxburgh Park
- Port Lincoln
- Flagstaff Hill
- Ascot Park
- Lenah Valley
- North Hobart