Graduates: untapped property segment
New Datamonitor research has revealed 50 per cent of recent university graduates would like to purchase property within the next 12 months, which could potentially pump an additional $25.4 billion into the current mortgage market.
However, the reality is that there are financial barriers hindering them from achieving this goal, specifically a lack of deposit (48 per cent) and high property costs (39 per cent).
The research report, developed in conjunction with mortgage insurer Genworth Financial, found that if more non-standard mortgage products were available, a greater number of graduates would take out a loan.
Ninety-one per cent said they would consider a product that enabled them to purchase a property with a 15 per cent deposit, while 43 per cent said they would use a shared equity loan requiring no deposit, provided they shared an increase in the value of the property with the lender.
A further one in four said they would borrow 90 per cent or more of the property value, with one in 10 prepared to borrow 100 per cent.
Genworth managing director Peter Hall said purchasing a home was a top priority for graduates, second only to paying off debts.
“With the help of appropriate products, [graduates] would consider entering the property market,” he said.
“If lenders can approach this customer segment with the right products, they will be increasing the attractiveness of an already sizeable market.”
The report was based on a survey of 1,300 Australian graduates that had completed a university course during 2003-06.
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