Key takeaways:
Houses remain the goal for many first-home buyers, but apartments and townhouses are becoming a practical first step.
Affordability is influencing buyer decisions, with many Australians balancing budget, location and lifestyle when choosing their first home.
Different buyers are making different trade-offs, with single buyers more likely to purchase apartments and couples more likely to buy houses.
Understanding your borrowing power can help you compare property types and determine what may be achievable based on your circumstances.
Houses remain the most popular choice among Australia's first-home buyers, but the latest internal Aussie home loan application data suggests many buyers are taking a different route into the market.
While six in 10 first-home buyers purchase a house, first-home buyers also make up 55% of buyers purchasing apartments and townhouses.
Together, these figures highlight that although houses remain the most common first-home purchase, apartments and townhouses continue to play an important role in helping Australians enter the property market.
As affordability pressures continue, the data suggests more buyers may be prioritising getting into the market sooner rather than waiting until they can afford their ideal home.
Houses are still the dream, but not always the first purchase
The figures suggest many first-home buyers are becoming more flexible about how they enter the market, adapting their expectations around what they buy first rather than giving up on home ownership altogether.
Aussie Lead Insight Analyst, Blazenka Lovric, said the data reflects a more pragmatic approach.
“The first property does not have to be the forever property,” she said. “It needs to be a realistic and sustainable way into the market.”
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While the data highlights broader buying patterns, Aussie Broker, Vicki Fraser said she sees a similar mindset in conversations with first-home buyers.
“The roadblock is people not asking the question because they assume they can't buy, based on everything they hear or because of preconceived ideas,” she said.
Rather than delaying home ownership while waiting for their ideal property, many buyers appear to be focusing on purchasing a home that suits their current financial circumstances, with the option of upgrading later.
Why apartments are becoming a practical pathway into home ownership
For buyers looking to enter higher-priced metropolitan markets, apartments and townhouses can provide a more accessible pathway.
The latest Aussie data shows apartment activity is concentrated in established metropolitan suburbs with good access to employment, transport and local amenities, reinforcing their role as one pathway into locations where detached houses may be less accessible for some first-home buyers.
Lovric said attached dwellings are becoming increasingly important in helping buyers access the market.
“Houses remain the dominant aspiration, but apartments and townhouses are where affordability and market access are intersecting most clearly,” she said.
For some buyers, purchasing a smaller property first may provide a practical way to enter the market before considering a move to a larger home later. Whether that's the right approach depends on individual financial circumstances, lifestyle and longer-term goals.
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Different buyers are making different trade-offs
The data highlights that first-home buyer journeys vary depending on individual circumstances.
Single buyers are more likely to purchase apartments and units, while de facto and married couples are more likely to purchase houses. Adults aged 25–35 continue to represent the largest first-home buyer group.
Lisa Maxwell of Aussie Ryde said many first-home buyers in Sydney are choosing units over detached houses.
“Affordability for a freestanding house in Sydney is very, very difficult,” she said.
The affordability gap is particularly evident in Sydney. According to Cotality’s June Home Value Index, Sydney’s median value for a house is $1,556,258, meanwhile the median for a unit is $898,623.
She said many buyers viewed this as a stepping stone rather than their final destination.
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“People are upgrading from units into townhouses and villas. Unless you've got family assistance, most first-home buyers are not buying a freestanding house in Sydney,” she said.
Alya Manji of Aussie Hurstville said many first-home buyers she meets initially have plans to purchase a house before adjusting their expectations once they understand their borrowing capacity.
“A lot of first-home buyers come to me wanting a house. Unfortunately, for many of them, capacity-wise and savings-wise, that's just not achievable straight away,” she said.
She estimates around three-quarters of her first-home buyer clients are purchasing units, with many others looking at townhouses or villas instead.
What this means if you're weighing up your first purchase
Choosing between a house, townhouse or apartment isn't simply about preference.
It's also about balancing your borrowing capacity, deposit, repayments, commute, lifestyle and longer-term plans.
For some buyers, that may mean purchasing a smaller property in a preferred location. For others, it may mean buying a house further from the CBD or considering regional markets. The right choice will depend on your own priorities and financial circumstances.
Understanding how much you may be able to borrow before you begin searching can help narrow your options and make it easier to compare different pathways into home ownership.
Fraser encouraged buyers to speak to a broker before they start making offers, as preparation can make a significant difference.
“The vast majority of buyers need a fair bit of work before they're actually ready to submit a loan application,” she said, explaining that reviewing borrowing capacity, existing debts and possible support options early can help buyers understand what's realistically within reach.
Your first home doesn't have to do everything
For many buyers, the first property is becoming less about finding the perfect home and more about choosing one that fits their circumstances today.
For previous generations, it may have meant renovating an older property or moving further from the city. Today's buyers are often making different trade-offs, choosing apartments, townhouses or smaller homes that better align with their current budget and lifestyle.
That doesn't mean giving up on long-term goals.
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Rather than trying to buy their forever home immediately, many Australians are focusing on buying a home that suits their circumstances today, while leaving room for future plans to evolve.
If you're considering buying your first home, whether you're comparing a house, townhouse or apartment, understanding your borrowing power before you begin searching can help you identify which pathway best suits your circumstances, compare different property types and set realistic expectations.
An Aussie Broker can help you explore your options, explain how different lending scenarios may affect your budget, and work out what may be achievable based on your circumstances.
