Budget mistake puts half of home buyers at risk
Panicked first-home buyers are going for broke in the housing market, blowing their budgets to the point where they are in a dangerous financial position of having almost no savings.
A new Finder report revealed almost half (47 per cent) of first-home buyers polled nationally went above their budget, up from 38 per cent in 2022, and many totally drained their savings in the process.
It's a position that means they will be vulnerable to even the slightest money hiccup and interest rate change and would be financially devastated if their income were to decrease.
'Having a savings buffer is key to financial security, if these Aussies lose their jobs or are hit with an unexpected cost, they will be extremely vulnerable,' said Richard Whitten, Finder loans expert.
He explained that first-home buyers rarely planned to empty their savings accounts and were often exceeding their budgets after facing enormous financial pressure.
'Aussies are being forced to take more financial risks,' Mr Whitten said.
'Most buyers plan to have some savings left over after the keys have changed hands, (but) with prices continuing to rise, this is no longer realistic.'
Finder's First Home Buyer Report 2025 revealed the average first-time buyer who went over their budget spent about $63,000 more than they anticipated.
One in 10 spent a whopping six figures more than they expected to, while one in five spent $50,000 more they had budgeted.
The result of this spending was frightening: one in three of those who had bought their first home said they had less than $10,000 in savings. Half of the buyers in this category had zero savings left.
Mr Whitten said first-home buyers who overstretched their finances to get into the market would pay a high price over the long term.
'Stretching beyond your means might get you the keys sooner, but it can lock you into years of financial strain,' he said.
Pressure to spend more has coincided with incredible price rises over recent years, particularly during the Covid outbreak.
PropTrack data showed house prices increased by about 70 per cent over five years in Brisbane, Adelaide and Perth.
The increase in Sydney over the same period was about 50 per cent, while Melbourne had the smallest increase of a major capital at 15 per cent since 2020.
'As house prices surge, first-home buyers are increasingly forced to empty their savings just to enter the market,' Mr Whitten said.
'This leaves them financially stretched – and vulnerable to stress – right at the start of their home ownership journey.'
First-home buyer fears may be contributing to their propensity to overspend.
When Finder last surveyed first-home buyers in 2022, many cited the 'fear of missing out' as a key driver.
A mix of peer pressure and concern that property prices would rise faster than wages
prompted some to buy before they were priced out. Since then, property price anxiety
has only grown. It was a common concern for 31 per cent of buyers in 2022, compared to
38 per cent today.
Mr Whitten said a first-home was a risky target for overspending.
'The early years of the home buying journey are when buyers are most vulnerable. Their savings are gone and their repayments are mostly interest.'
Mr Whitten added that Aussies should aim to buy within their means even if it meant delaying home ownership a few more years.
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