Australia housing market: How long it takes first home buyers to save house deposit

Daniela PizziraniNCA NewsWire
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Camera IconNot Supplied Credit: News Corp Australia

A new report has revealed how long it takes Australian first home buyers to save for a deposit, as property market prices continue to radically outweigh wages.

The report by ANZ and CoreLogic – a property data firm – shows it would take first home buyers, living on an average weekly salary of $1,665, more than 11 years to save for a median 20 per cent deposit, which is necessary to avoid paying Lenders Morgage Insurance (LMI).

The data found the median deposit to purchase a property in Australia, including both units and houses, has blown out to $147,795.

The average time to save for a home differs in urban and regional areas, with capital cities hitting 11.2 years, while rural centres sit at 10.5 years.

CoreLogic head of Australian research, Eliza Owen, said the record high prices are fuelling a “significant barrier” for first time property buyers.

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Camera IconFirst home buyers take an average 11 years to save up for a deposit on their first home. David Swift Credit: News Corp Australia

“The national median dwelling value is now an estimated 8.5 times the median annual household income level nationally,” she said.

“This is a record high and an increase from 6.8 times since the onset of Covid-19 two years ago.

“Moreover, the increase in the dwelling value to income ratio was largest across regional Australia, where property prices have risen substantially more than incomes.”

The report discovered the cost of renting across the nation – including in NSW, Victoria, Queensland and Western Australia – is almost the same as paying off a mortgage.

Some examples include Bourke in NSW, East Pilbara in WA, Grampians in Victoria and Far North Queensland.

Since the pandemic, advertised rentals have increased by 13 per cent.

Last month, new research by Finder – a financial comparison site – showed that almost half of surveyed tenants struggled to pay their rent.

Finder’s senior editor of money, Sarah Megginson, said the increasing pressure on renters puts them in a very vulnerable position, with “little money left for other necessities”.

“Once they pay the rent, life is very hard,” Ms Megginson said.

“Some tenants simply can‘t afford the rapid increase in their rent in such a short amount of time and there are even stories of families being forced to live in their cars, or in makeshift tents in the street.”

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Camera IconTenants are urged to negotiate with their property manager if they’re struggling to meet their rental payments. NCA NewsWire / Brenton Edwards Credit: News Corp Australia

Ms Megginson urged struggling renters to try to negotiate an “emergency audit” with their property manager.

“If you can’t afford your rent and you have a lease now, reach out to your property manager and see if you can come to an agreement with your landlord,” she said.

“Those currently in a house could consider downsizing to a townhouse or unit, as rent increases for apartments have not been as steep.

“Slash all unnecessary expenses and do an emergency audit of all utilities to see where you can save money on things like energy bills and insurance.”

Originally published as Australia housing market: How long it takes first home buyers to save house deposit

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