house savings
It now takes seven years and one month to save for an entry-level house in Sydney. Image – Canva.
  • House buyers are taking an average six months longer to save for a deposit
  • It takes an extra 11 months compared to five years ago
  • Units recorded little or even negative change in savings time however

In order to save for a 20% deposit on an entry-priced home in Sydney, couples will need to save for seven years and one month, according to Domain’s latest First Home Buyers Report.

This represents an additional six months as compared to a year ago, and an extra 11 months compared to five years ago.

All the capital cities, except Brisbane and Melbourne, recorded an extra two and nine months of savings were required.  The Queensland capital saw a four-month decline while in Melbourne there was no change over the past year.

Of the eight capital cities, the sub-million capitals recorded the greatest changes: as in Sydney, Darwiners and Hobartians need to save for an extra six months while Canberrans need to save for an extra nine months compared to a year ago.

Perth is the quickest city for buyers, with a three year seven month saving wait on average.

Time to save for a house deposit: capital cities

deposit house domain
Source: First Home Buyers Report, Domain

Dr Nicola Powell, Domain Senior Research Analyst, said the annual Report enables Domain to assess variables in the market in each capital city and said while there were many advantages for first home buyers, equally this same group of buyers are also faced with significant macroeconomic challenges.

“While we have witnessed first-home buyers purchasing close to record numbers, taking advantage of low interest rates, tax cuts, and federal and state government incentives, those attempting to save for an initial deposit are facing challenges of their own,” she said.

“Rising living costs, low wage growth, weak savings rates and rapidly rising property prices are all factors that immediately impact the opportunity for first-home buyers to enter the property market.

“What we aim to illustrate with this report is the actionable timeline and path to purchase based on [an] average Australian’s current economic status and savings opportunities, all while highlighting potential trends for first-home buyers to be informed of when considering the location, size and type of property they wish to purchase.”

Little or even negative change for units

The time taken for a couple to save for a 20% deposit on an entry-level priced unit has remained the same or even fallen compared to last year.

In Sydney, it takes five years and five months – a decline of four months compared to last year, and six months less compared to five years ago. Melbourne has witnessed a two-month decline although compared to five years ago this is up by a month.

Time to save for a unit deposit: capital cities

deposit unit domain
Source: First Home Buyers Report, Domain

Dr Powell advised first home buyers not to be disheartened and to take a wide range of factors into account when buying a property, such as government incentives.

“While a general increase in the savings period naturally sets buyers back, it shouldn’t be considered a road block. First-home buyers should take the opportunity to evaluate the current market opportunities and consider what lifestyle changes they can make in order to reach their property goals,” she said.

“Affordability tends to improve the further the distance from CBD, and factors such as changed working habits means that moving further afield is now an option for some.

“Taking advantage of government schemes such as the Federal Government’s First Home Loan Deposit Scheme (FHLDS), which allows a first-home buyer to secure a home loan with as little as a five per cent deposit, can also improve the time to save period, and with property prices rising at the fastest rate in decades, gaining access to the market sooner could be advantageous.”

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