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Saving home deposit major barrier for first-home buyers in Australia: Fitch Ratings

Xinhua, June 30, 2016 Adjust font size:

Housing affordability for first-home buyers is at its most expensive on record in both Sydney and Melbourne, according to ratings agency Fitch.

They said that this was despite housing-loan serviceability being at its cheapest since 2003.

"Fitch expects first-home buyers to remain a diminishing part of the Australian housing sector, in the absence of a policy response to reduce house prices or subsidise first-home buyers' entrance into the market," they said.

Fitch noted home values have rapidly increased in recent years.

"Low interest rates have been a significant driver, as borrowers are able to service larger loan balances and existing owners can access equity in their properties to purchase investment properties," they explained.

"These factors have acted as a barrier to entry for first-home buyers."

Fitch calculated a Deposit to Income' ratio to measure the difficulty for first-home buyers to enter the housing market.

Sydney's ratio set a new record of 120.2 percent in December 2015, breaking the previous record of 110.6 percent in 2004.

"First-home buyers are being squeezed out of Sydney and Melbourne because of high deposits required relative to income." Endit