Single income buyers in the Melbourne market

Melbourne first-time home buyer Will Testa saves $2500 a month and lives with his mother, but his dream $650,000 property is being crushed by “unblinking” rivals with prices overtaking by $20,000.
On paper, industry data suggests the Melbourne market is flat.
But down in Melbourne’s north and north-west, Pascoe Vale, Glenroy, Airport West and Tullamarine, Mr Testa says there is no problem.
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At a recent auction in the north of the city, he bid $1000 as he neared his ceiling, a competitor responded with blocks of $5000.

“I could go up $1,000, they’ll go up $4,000,” he said.

“You only needed to beat me by $2000, but you just added $10,000 to your purchase price.”

Seeing 20 group files for entry-level houses has become the norm.

Couples with dual incomes, downsizers and equity investors often circle the same listing.

Mr Testa says bids of $1000 are quickly being reached with jumps of $5000 at auctions in Pascoe Vale, Glenroy and surrounding areas. Photo: Brendan Beckett

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“As a consumer with one income, there is only so far I can stretch,” said Mr Testa.

“You’re competing with people who may have twice the borrowing capacity or could use an extra $10,000 or $20,000 without blinking an eye.
“That’s when he starts to get disappointed.”

Mr. Testa said that the financial gap between single-income and two-income families is closing fast.

“Couples can save $5,000 a month between them, I can save $2,500,” he said.

Mr Testa has considered a 5 per cent deposit scheme but says stretching it too far in a competitive market has financial risks. Photo: Brendan Beckett

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“Over time that gap widens, the goalposts keep changing.”

He considered using the federal government’s 5 percent deposit program to get the limit, but is worried about stretching it too far.

“You will never have a lot of money if you buy a house,” he said.

“I don’t want to search and I don’t have anything for repairs or emergencies anymore.

“That’s a scary situation to be in.”

You’ve also watched properties go above their advertised guidance before privately returning to higher prices.

“If prices go up another 5 percent, that’s about $35,000 on a $700,000 home,” he said.

“As a single income earner, that changes materially how the bank will lend and what repayment looks like.
“It’s not a small shift.”

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david.bonaddio@news.com.au