Young Australians are spending around half of their incomes on mortage repayments
The complex reality of deposit savings and mortgage stress for aspiring homeowners. Image: Canva.
  • Timed needed to save for a home deposit reduced by two months.
  • Record prices and "stretched" mortgage payments pushing many towards bank of mum and dad.
  • Long-term solutions to housing undersupply needed to improve affordability for first-time buyers.

First-home buyers across the country can heave a sigh of relief as the time needed to save up for a 20% deposit has been shaved by two months, according to Domain’s 2024 First-Home Buyer Report, written in collaboration with Unloan.

However, there’s a caveat.

Time needed to save for a home deposit has declined

The chief obstacle to entering the housing market for first-home buyers (FHBs) is saving for their home deposit. Accordingly, Domain’s report has found that the time required for couples between 25 and 34 to save for a 20% deposit for entry-priced dwellings has fallen by two months for houses and one month for units.

Here, entry-priced dwellings are defined as houses or units falling within the 25th price percentile.

Time to save for a 20% deposit on an entry-priced home for a couple aged 25-34

Time to save
2024 Annual change in months Annual change in months 5-year change in months 5-year change in months
Area Entry house Entry unit Entry house Entry unit Entry house Entry unit
Sydney 6y 8m 4y 6m -1 -1 6 -11
Melbourne 5y 5m 3y 8m -3 -1 -3 -8
Brisbane 5y 2m 3y 9m 4 4 12 4
Adelaide 5y 1m 3y 6m 5 4 15 8
Perth 3y 10m 2y 5m 4 2 4 0
Hobart 4y 10m * -6 12
Darwin 3y 7m 2y 3m -1 -3 0 0
Canberra 5y 9m 3y 7m -4 1 10 2
Combined capitals 5y 1m 3y 7m -3 -1 9 2
Combined regionals 3y 9m 2y 11m 1 -2 8 2
Australia 4y 9m 3y 5m -2 -1 8 2

Source: Domain.

“The current market still poses significant challenges for first-home buyers, given the record-high property prices and the ongoing cost-of-living crisis,” said Domain’s chief of research and economics, Nicola Powell.

“While there has been a slight decrease in the time required to save compared to the previous year, it’s important to note the nuances involved. This decrease primarily applies to Australians who can save a consistent amount ongoingly and have experienced wage growth, as these factors are key drivers.”

Mortgage stress is now the norm

Another important factor affecting FHBs is mortgage serviceability. This is calculated for a hypothetical FHB as the initial mortgage repayments on an entry-priced property for a buyer with a 20% deposit, conveyed as a percentage of an average household income for couples between 25 and 34.

Homeowners using more than 30% of their income to pay for their mortgage are deemed as undergoing “mortgage stress”.

Mortgage repayment on entry-priced home as a percentage of income for couples aged 25-34

Mortgage repayment on entry-priced home as a percentage of income for couples aged 25-34
Source: Domain.

Across the combined capitals, couples allot an average of 46.5% of their incomes to pay for houses and 30.7% for units.

“The stretched mortgage serviceability highlights the dual effect of high cash rates on first-home buyers,” Powell said.

“While there has been a slight reduction in the time required to save a deposit (for those who can consistently save and have experienced wage growth), the higher interest rates are also making home loan repayments more difficult, which is why more people are facing mortgage stress.”

Nicola Powell, Domain

Government intervention direly needed to address affordability issues

“The time to save, mortgage serviceability and record high property prices explains the growing reliance of some first-home buyers on financial support from the bank of mum and dad to secure a deposit,” Powell explained.

Areas with the shortest time to save for a 20% deposit on an entry-price house for a couple aged 25-34, by city

Sydney Melbourne Brisbane Perth Adelaide Canberra Darwin
Wyong, 5y 7m Melton-Bacchus Marsh, 4y 6m Cleveland-Stradbro ke, 4y 1m Perth City, 3y 3m Playford, 3y 11m Tuggeranong, 5y 6m Palmerston, 3y 5m
St Marys, 5y 8m Sunbury, 4y 6m Ipswich Hinterland, 4y 1m Mandurah, 3y 6m Gawler-Two Wells, 4y 4m Belconnen, 5y 8m Darwin Suburbs, 3y 8m
Wollondilly, 5y 8m Tullamarine-Broad meadows, 4y 11m Ipswich Inner, 4y 4m Armadale, 3y 7m Adelaide Hills, 4y 11m Gungahlin, 5y 10m Litchfield, 3y 8m
Blue Mountains, 5y 11m Cardinia, 5y 1m Springwood-Kingst on, 4y 5m Kwinana, 3y 7m Salisbury, 4y 11m Weston Creek, 5y 10m Darwin City, 4y 8m
Mount Druitt, 5y 11m Moreland-North, 5y 1m Beaudesert, 4y 9m Rockingham, 3y 8m Onkaparinga, 5y Woden Valley, 6y 8m
Richmond-Windsor, 5y 11m Wyndham, 5y 1m Stirling, 3y 8m

Source: Domain

“For buyers eager to enter the market, there are opportunities to explore different types of homes or locations for better affordability. Property type and location are the keys to quicker market access. This is why “rentvesting” has gained popularity.”

“This complex situation does underscore the need for government action. While initiatives like the Help to Buy scheme offer promising solutions, tackling housing undersupply in the long term requires concerted efforts from our government.” 

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