By Leanne Spring November 1, 2024

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Australia’s Housing Crisis: Where Can Savvy Savers Still Buy a Home?

Property Investment
Australia’s Housing Crisis: Where Can Savvy Savers Still Buy a Home?

Key takeaways

Australia's housing market is facing unprecedented challenges, with no clear end in sight. The dream of homeownership feels increasingly out of reach for many, but there is still hope for those who take a strategic approach to saving.

Mortgage Brokers AU has analysed Australia's capital cities to show which cities provide the best opportunities to save for a deposit.

Perth is the most affordable city for savers, with an average monthly rent of $650 and the highest weekly salary in the country at $2,108.

Brisbane is the toughest city for aspiring homeowners, with a rent-to-income ratio of 34.15% and a cost of living of $197.35 per month. Residents save just $72 per month towards a home deposit.

In today's difficult housing market, it's still possible to achieve the dream of owning a home. With the right approach and mindset, even in more challenging markets like Brisbane, disciplined budgeting and careful planning can make a difference.

Australia's housing market is facing unprecedented challenges, with no clear end in sight.

Since 2020, rents have risen by 35%, vacancy rates have hit rock bottom, and the supply of new homes is woefully inadequate.

The projected shortfall of 257,000 new homes over the next five years is not just a number—it’s a clear signal of the mounting pressures on both renters and would-be homeowners.

The dream of homeownership feels increasingly out of reach for many, particularly as wages stagnate while living costs soar.

But despite the headwinds, there’s still hope for those who take a strategic approach to saving.

Mortgage Brokers AU has done a deep dive into the affordability landscape across Australia’s capital cities, analysing key metrics like rent prices, average incomes, living costs, and monthly savings potential.

Their findings offer a roadmap to homeownership, showing which cities provide the best opportunities to save for a deposit—even in this challenging market.

Perth: the most affordable city for savers

For those looking to save for a home deposit quickly, Perth stands out as the most favourable option.

According to the analysis, Perth achieved an affordability score of 8.56 out of 10, the highest of any capital city.

With an average monthly rent of $650 and the highest weekly salary in the country at $2,108, Perth residents are in a prime position to fast-track their savings.

Perth’s wages are significantly higher than those in other capitals.

For example, residents earn 20% more than their counterparts in Adelaide, where the average weekly salary is $1,735, yet rent prices in Adelaide are comparable at $595 per month.

This income disparity gives Perth a significant edge, allowing locals to save more efficiently.

The lower cost of public transport in Perth—just $160 per month—also helps residents keep more of their income.

With rent only taking up 30.85% of the average weekly income, Perth residents are left with more disposable income to save, making it the best city for aspiring homeowners.

Another key factor supporting Perth’s affordability is the high proportion of homeowners in the city.

With 40.5% of residents already holding mortgages, the city’s property market is both mature and stable, giving first-home buyers confidence that their investment is secure.

On average, Perth residents can save $82 per month towards their deposit—12% more than those in Melbourne, where monthly savings average $73.

Melbourne: a cultural hub with savings potential

Melbourne might be known for its vibrant arts and culture scene, but it also ranks highly for prospective homebuyers.

Coming in second with an affordability score of 7.75 out of 10, Melbourne offers a balance of lifestyle and savings potential.

Rent in Melbourne is 11% cheaper than in Perth, averaging $580 per month.

However, this affordability is tempered by lower average weekly salaries, which sit at $1,858—13% below Perth’s.

This means Melbourne’s rent-to-salary ratio is only slightly higher than Perth’s, with rent consuming 31.2% of the average income.

However, the lower income levels reduce the amount residents can save each month.

On average, Melburnians manage to save $73 per month, which—while less than in Perth—is still enough to build a deposit over time.

Melbourne’s public transport costs are slightly higher than in Perth, at $164 per month, which adds another small pressure to household budgets.

Despite this, 35.6% of Melbourne residents already own their homes, suggesting that while saving might take longer here, it’s still achievable for many.

Hobart

Hobart: a scenic alternative with lower living costs

Hobart ranks third in the analysis, with an affordability score of 7.38 out of 10. Known for its stunning harbour, rich history, and laid-back lifestyle, Hobart offers an attractive alternative for those looking to save for a home.

With an average rent of $540 per month—the lowest of all the cities analysed—Hobart appears on the surface to be the most affordable option.

However, this advantage is offset by the city’s lower average weekly salary of $1,670.

Even with lower rent, Hobart residents face similar pressures when it comes to saving, as rent still consumes 32.35% of their weekly income.

However, the city’s smaller size means that public transport is significantly cheaper—at just $86.23 per month, the lowest of all cities studied.

This makes day-to-day living costs more manageable, and while monthly savings average $65—less than in Perth or Melbourne—it’s still a solid starting point for those willing to embrace Hobart’s slower pace of life.

Despite the lower savings rate, Hobart offers a unique quality of life that many Australians find appealing.

It’s a city where nature meets culture, and for those who value lifestyle as much as financial goals, it remains a viable option for homeownership.

Brisbane: the toughest city for aspiring homeowners

At the other end of the spectrum, Brisbane ranks as the most challenging capital city for saving towards a home deposit, with an affordability score of just 5.77 out of 10.

Despite offering relatively lower rent at $630 per month and an average weekly salary of $1,845, the cost of living in Brisbane makes saving difficult.

One of the biggest obstacles is the high cost of public transport, which averages $197.35 per month—one of the highest of any Australian city.

This, combined with a rent-to-income ratio of 34.15%, leaves Brisbane residents with little disposable income.

On average, they save just $72 per month towards a home deposit, making the path to homeownership slower and more arduous.

While the financial pressures in Brisbane are significant, the city still holds strong appeal for many due to its desirable lifestyle.

Known for its subtropical climate, vibrant cultural scene, and outdoor living, Brisbane offers a quality of life that can make the longer savings timeline more bearable.

Practical tips for boosting savings in a challenging market

Shaun McGowan, CEO of Mortgage Brokers AU, offers valuable insights for aspiring homeowners navigating the current housing crisis.

His advice focuses on practical, actionable steps to help buyers make the most of their savings potential, despite the challenging conditions:

Detailed budgeting: Start by creating a comprehensive budget that tracks every dollar spent. By identifying areas where you can cut back—such as dining out, entertainment, or subscription services—you can free up more money to put towards your home deposit.
Boost your income: In a tough market, relying solely on your primary income may not be enough. Consider picking up a side gig, freelance work, or additional hours at your current job. Even small increases in income can accelerate your savings.
Consider relocating: While it may not be feasible for everyone, relocating to a more affordable city—like Perth—could significantly shorten the time it takes to save for a deposit. Of course, this comes with its own challenges, such as finding new employment and settling into a new community, but for those who are flexible, it’s a strategy worth considering.
Automate your savings: Set up automatic transfers to a dedicated savings account. This makes saving effortless and ensures you consistently put money aside without the temptation to spend it.
Get professional advice: Financial advisors and mortgage brokers can offer tailored advice on how to maximise your savings and develop a plan to achieve homeownership. Their guidance can be particularly valuable in helping you navigate the complex landscape of the property market.

The road ahead: difficult, but not impossible

There’s no denying that Australia’s housing market is under strain, and for many, the path to homeownership seems steeper than ever.

But for those who plan strategically, save diligently, and take a long-term view, it’s still possible to achieve the dream of owning a home.

Cities like Perth offer hope for faster savings, while even in more challenging markets like Brisbane, disciplined budgeting and careful planning can make a difference.

While the journey may be long, it’s important to remember that every dollar saved brings you one step closer to your goal.

With the right approach and mindset, even in today’s difficult market, the dream of homeownership is still within reach.

About Leanne Spring Leanne is a highly experienced Buyers Agent in the Brisbane Real Estate market. Leanne became a passionate lover of property in 2001. Since then, both professionally and personally, she has been involved in all aspects of property including purchasing, negotiating, renovating, and selling.