It’s no secret that for the most part across Australia, property prices are skyrocketing. Domain’s annual First Home Buyers Report, published March 23, 2022, found that over the past decade, house prices across the combined capitals increased by 101% and unit prices by 52%. In Sydney and Melbourne, house prices have increased by 153% and 107% respectively.
But what does all that mean for first-home buyers? How long does it now take for them to save up for a house? The report looked specifically at how long it takes a couple aged 25-34 with an average dual income to save a 20% deposit for an entry-priced property across our capital cities and their surrounds, revealing it takes a whopping eight years.
Among the capital cities, Sydney took the longest to save for an entry-house at eight years and one month, Melbourne was next at six years and six months, then Brisbane at four years and 10 months, Adelaide at four years and seven months and Perth at three years and seven months.
“First home buyers are facing a growing financial hurdle when it comes to saving a deposit, and this is becoming more daunting in the context of rising living costs, low wage growth, weak saving rates and the rapid rise in property prices,” says Domain’s Chief of Research and Economics, Dr Nicola Powell.
“Our hope with this report is that we are able to equip first-home buyers with the latest information to help consider location, size and type of property as they embark on their property journey.”
The report also found that the difference between saving for an entry-house or unit is continuing to widen, with, across our capital cities, purchasing a unit potentially resulting in buying your first home 2 years and 2 months earlier than a house. An average of 18.4% of income was dedicated to mortgage repayments on units across the capitals compared to 27.1% for a house.
As for where people are looking to buy, the report noted that remote working had made balancing value for money, commute-to-work times and the size of the property easier, meaning more people were willing to look for homes further afield from their employment base. In turn, this had prompted a rise in keywords searches on Domain associated with lifestyle, greater space, garden and yard as doors to greater affordability have been opened for those who are now able to live in the outer suburbs.
“The decentralisation of our workforce is being embraced by middle Australia, with some working from home, even if it is for a couple of days a week, and awakening affordability,” says Dr Powell. “In saying this, we know that not everyone is able to do this, with often lower-income workers needing to be close to their workplace as they are unable to work from home.
“When navigating the first home buyer’s market, considering property type and location, or even becoming a rentvestor, can all be worthwhile,” she advises. “Government incentives such as the First Home Loan Deposit Scheme or the First Home Super Saver Scheme, which allows prospective first-home buyers to make additional superannuation contributions that are later accessible for a first home deposit, can also be advantageous to shave years off the time it takes to save for an entry-priced deposit.”