Banks driving apartment buyers to the suburbs

Bayleys residential sales manager Rachel Dovey says the requirement by major banks that first time home buyers have a 35% deposit for inner-city apartments less than 50 square-metres in size, is forcing many potential purchasers to look to more traditional ‘brick and tile’ dwellings in the suburbs – where only a 20% deposit is required.

“It’s creating a disparity in buying habits,” Dovey said. “For example, to buy a $200,000 two-bedroom apartment, first home buyers now require a $70,000 deposit, and even then have to jump through hoops to get mortgage approval from the banks.

Some banks won’t even lend on apartments. “By comparison, to buy a $280,000 three bedroom home in more established suburban areas, the same purchasers only require a $56,000 deposit. So our first home buyer is getting more ‘home’ for less deposit.

“As a result, we’ve seen a noticeable shift in the buyer demographics for inner city apartments over the past 16 months. It used to be that a sizeable percentage of enquiries were coming from professional ‘20-somethings’ attracted to the convenience and lifestyle of living in the CBD.