Revealed: Alarming shift in first homebuyer age across Australia

For generations, the Australian dream of home ownership was synonymous with financial security – a debt-free future to enjoy in retirement.

But that dream is slipping away for many, as a growing number of Australians are carrying mortgage debt well into their later years, raising concerns about the long-term financial stability of retirees.

Recent data from Westpac reveals a troubling trend: one in five first-home buyer loans issued nationally over the past year went to purchasers aged over 40.

The average age of first-home buyers has steadily risen, now sitting at 34 across the bank’s network – up nearly two years since 2020.

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Broker networks suggest the figure may be even higher, ranging between 34 and 37.

Westpac senior economist Matthew Hassan attributes part of this shift to the affordability crisis gripping the housing market.

While recent government initiatives, such as the expansion of the First Home Guarantee Scheme, have helped some buyers enter the market sooner, Mr Hassan warns these measures are not enough to address the deeper structural issues.

“The expanded first home guarantee will make it easier to get a foot in the door by lowering the deposit hurdle, which is fantastic … (but) loan serviceability will remain a challenge for buyers,” he said.

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Single retiree Liz Buckman who is looking to downsize from her current house at Hendra to a smaller apartment to help battle mortgage and finance pressures. Picture Lachie Millard

A generational shift in mortgage debt

The challenges facing today’s first-home buyers are starkly different from those of previous generations.

Research by property group SuburbTrends highlights a dramatic increase in the age at which Australians are paying off their mortgages.

In 1981, the median age for mortgage freedom was 52.

By 2016, it had climbed to 62.

The 2021 Census revealed that nearly one in four Australians aged 55 to 64 (22.8 per cent) were still paying off home loans – almost double the rate from two decades earlier.

SuburbTrends director Kent Lardner warns that the situation could worsen in the coming decades.

“The biggest issue and concern is not the retiring cohort of today,” he said.

“The bigger story emerges in 25 years from now.”

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One in five first-home buyer loans issued nationally over the past year went to purchasers aged over 40.

Mr Lardner explained that today’s first-home buyers face a unique set of risks.

Many are purchasing properties at inflated prices, with limited assurance of long-term growth. If housing values stagnate or decline, these buyers could find themselves saddled with significant debt and few options to downsize or build equity.

This was a stark contrast from many people retiring today who had more options, even if they still carried debt.

“If you purchased 20 years ago or more, then you are likely in home #2 or #3 by now and have a small mortgage relative to the value of the home,” he said.

“And buying 20 years ago means you have ridden a massive growth wave – which may not likely be the case for the next 20 years considering the key metrics of affordability.

“This group will have a stack of equity and can downsize with plenty of options.”

Retirement debt dragging people down

Retirement Living Council (RLC) executive director Daniel Gannon said the figures were “alarming”.

“Debt is following us into retirement, and it’s dragging people down,” Mr Gannon said.

“That debt doesn’t just strain the budget – it delays care, ramps up stress, and forces tough decisions about what is prioritised in retirement.

“Our retirement system is stuck in the past, and older Australians are paying the price.

“It was built for a world of early homeownership, shorter working lives, and lower costs. That world doesn’t exist anymore, with relevant policy frameworks effectively frozen in time.”

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Crystal Linter is among a growing number of homeowners making extra mortgage repayments to retire debt free. Picture: David Crosling

Ms Gannon said the RLC was pushing for reforms to make it easier to rightsize, reduce debt, and free up equity.

“If you’re still paying a mortgage at 65, you shouldn’t be punished by prehistoric policies,” he said.

“The CRA cap hasn’t kept pace with property prices. In 1997, it covered 55 per cent of the median home, but today it’s just 26 per cent. That means many pensioners are locked out of the support they need, just because they’ve rightsized into a retirement village.

“People are buying later and retiring later, meaning the system has to catch up.

“We need a modern approach to retirement that reflects how Australians actually live today.”

– With Elizabeth Tilley

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