I bought my first property 20 years ago and I had it easier

We hear constantly that first-home buyers feel like they have it so much harder than first-time owners of the past - but do they really?

When we compare house prices, interest rates, incomes and first home incentives from when I bought my first property 20 years ago, is it very different from today?

Here's my take: when I bought my first home a little over 20 years ago, it was unequivocally easier than it is today for first-timers to get into the market.

I was "lucky" for a number of reasons.

But even though I wholeheartedly believe I had it easier than the current generation of homebuyers, I still didn't have it easy. I still had to make sacrifices.

And if you want to buy your first home in 2024, it might be possible, if you're willing to make sacrifices, too.

What did a first home cost in 2003?

My first home was exactly what dreams are made of.

If your dreams include cheap, painted besser block internal walls, apricot-coloured laminate kitchen benchtops and a courtyard that could barely fit a clothesline, let alone the clothes I hung on it.

It was a very basic townhouse - the brick walls were painted instead of normal plasterboard walls and not in a cool, New York-style warehouse way, but in a cheap and cheerful cost-saving measure.

I decided to buy when my then-boyfriend (now husband) got offered a job in radio in far north Queensland - a location over 1000km from our friends, our family and our community - that we'd never visited before.

We took the opportunity to further his career and for me to get onto the property ladder, too (he owned an apartment on the Gold Coast).

I paid $152,000 for a two-bedroom apartment in a suburb of Townsville. It was well-located, just two blocks from the beach, but there's the first clue of one of the sacrifices made: I bought my first home in a regional town in Queensland.

It was very far from the home I really wanted to buy: an apartment in Broadbeach on the Gold Coast. But one- and two-bedroom apartments in that area were going for $250,000 or more at the time, about double what I could afford.

For added context, to buy an apartment in Sydney at the time, prices started in the mid-to-high $300,000s. For instance, a work colleague bought a two-bedroom apartment in Crows Nest for $405,000 in 2005. I was gobsmacked that she'd paid almost triple what I had!

How did I save for a property deposit 20 years ago?

This is where it was quite a bit easier to get into the property market than it is today.

My income at the time was $32,000 and my partner earned $37,000. My take-home pay was $494 a week - I remember because it was so close to $500!

I needed a deposit of $15,200. I also had to pay lenders mortgage insurance (LMI) because my deposit was less than 20%, which was a few thousand dollars, and I added it to my mortgage.

To get my first home deposit 20 years ago...

• I got the first homeowner grant, which was a cash payment of $7000.
• I sold my car for $5500 (I had worked hard to pay the loan off over the previous three years and I owned it outright), and my partner and I shared his car.
• I spent about six months saving the other few thousand dollars I needed.
• I also didn't have to pay stamp duty as I was a first-home buyer.

To buy your first home today...

• You may have access to a first home owner grant of $10,000, but in most states and territories, it's only available when buying new homes (because the government wants to stimulate more housing supply).
• You may be able to buy with a deposit as low as 5% and avoid paying LMI, thanks to the First Home Guarantee. That means you could purchase a home worth $600,000 with a deposit of $30,000 and not pay any LMI, which would ordinarily be around $22,800 on that purchase price/deposit.
• There are also other schemes designed to help you save and get into your first home sooner, like the First Home Super Saver Scheme.
• First-home buyers can access a stamp duty waiver. It varies depending on where you live, but can save you up to $30,000.

How affordable were home loan repayments 20 years ago?

On my mortgage back then, the repayments were $232 a week based on a loan of $137,000 and an interest rate of around 6%. My income was just under $500 a week, so that accounted for about half of my paycheque.

But my partner netted just over $500 - between us, we made around $1050 a week. Our gross income was $69,000 a year.

Our mortgage repayment was therefore about 22% of our weekly combined income.

Fast-forward 20 years and according to CBA data, the average gross household income for the bank's first home buyers in early 2023 was about $117,000, or about $1750 a week after tax. The average purchase price was just under $629,000.

Assuming a 5% deposit of $31,450, an interest rate of around 6% and a loan of around $600,000, repayments are about $830 a week.

That mortgage repayment equals a shockingly high 47% of your combined weekly income.

With a 10% deposit of $63,000 and a loan of $570,000, the weekly repayments are $785, which is still insanely high at 44% of your combined income.

But let's say you followed my lead and went to a regional town to buy a home with plans to live there for a year or so, before moving back to your preferred location and renting it out.

When I checked the sales history on my old home, you can now buy a similar-style townhouse in regional Queensland for about $350,000. Assuming a 10% deposit of $35,000, your home loan would be $315,000. Based on a 6% interest rate, your repayments would sit at around $440 a week, or 25% of your household income.

None of these calculations factor in LMI, which can be added to your home loan, if you don't have the cash to pay it upfront. As mentioned, you may also be eligible for an LMI waiver as a first-home buyer.

What's the verdict?

When we compare like for like - buying your first home in a regional town, with two incomes to service the loan - there's not a huge difference in affordability now and 20 years ago.

Where it gets tricky is trying to afford a home where you want to live and saving for a deposit, when it's hard enough just paying the bills let alone having any money left over.

It's not an easy road, but it's not impossible, either. My advice is to learn more about the ins and outs of buying a home and the grants and resources available to you, as you may be surprised that it's not as "out of reach" as you first thought.

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