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How long does it take for first-home buyers to save for a deposit in every capital city in Australia? - featured image
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How long does it take for first-home buyers to save for a deposit in every capital city in Australia?

Embarking on the journey to homeownership is a significant milestone for many, yet the path to securing a deposit can vary widely depending on location.

In Domain’s recent First-Home Buyer Report we find some intriguing shifts in buying behaviour of first-home buyers.

It now takes an Australian couple aged 25-34 an average of four years and nine months to muster a 20% deposit for an entry-priced house.

Time To Save For A 20 Percent Deposit On An Entry House

Interestingly, this is a decrease of two months compared to last year.

For those eyeing a unit, the average saving period is now three years and five months, one month shorter than the previous year.

Time To Save For A 20 Percebt Deposit On An Entry Unit

Remember, an 'entry-priced' property sits in the 25th percentile, a crucial detail for first-home buyers.

Dr Nicola Powell, Domain's chief of research and economics, notes that while the journey to buying a first home is emotionally taxing, recent higher interest rates have added another layer of complexity.

Surprisingly, these higher interest rates have slightly reduced the time required to save a deposit, thanks to consistent savings and wage growth.

However, the flip side is that these rates can make home loan repayments more challenging.

In the race of capital cities, Sydney still tops the chart, requiring over six years for a house and four for a unit.

It's followed by Melbourne, Brisbane, Adelaide, and Canberra, each averaging over five years for a house deposit.

While some areas have seen marginal improvements in saving time, let’s not overlook the soaring costs of entry-level homes in cities like Brisbane, Adelaide, and Perth, and to a lesser extent, Sydney.

Brisbane saw an astounding jump from $560,000 to $635,000 within a year, while Adelaide and Perth also witnessed significant increases.

In contrast, Melbourne, Darwin, and Canberra have seen more stability in entry-level property prices.

Entry prices, houses
Dec-23 Dec-22 YoY 5-year Change
Canberra $800,000 $800,000 0.0% 42.6%
Adelaide $595,000 $517,000 15.1% 61.7%
Brisbane $635,000 $560,000 13.4% 51.2%
Darwin $460,750 $450,000 2.4% 15.2%
Hobart $530,000 $550,000 -3.6% 55.3%
Melbourne $678,000 $670,000 1.2% 16.9%
Perth $505,000 $435,000 16.1% 31.6%
Sydney $927,250 $870,000 6.6% 38.0%
Australia $545,000 $492,000 10.8% 47.3%

Source: Domain First Home Buyer Report, Feb 2024. Note: Entry price is based on 25th percentile for the 3 months to Dec 2023.

But, as Powell suggests, we might witness a spike in these markets with the anticipated official cash rate cut later this year.

Amidst this backdrop, first-home buyers are increasingly active.

December 2023 saw first-home buyers representing 38% of all new home loans, a significant increase from 2022.

This surge is partly fueled by various state and federal grants and schemes, easing market entry.

These include stamp duty discounts and reduced deposit requirements.

Powell anticipates that new initiatives like 'Help to Buy' could further energize the lower end of the housing market, potentially boosting prices.

This might make market entry more challenging without familial financial support.

Powell also offers two key strategies for prospective buyers: considering properties further from city centres or shifting focus from houses to units.

She points out that areas offering affordable housing options generally become more accessible the further they are from the city.

Moreover, units present a balance of affordability and proximity to CBDs.

Examples include Sydney’s Fairfield, Melbourne’s Essendon, and Brisbane’s Springwood-Kingston, where saving times are notably shorter.

In conclusion, while the landscape for first-home buyers is ever-evolving, understanding these trends and adjusting strategies accordingly can significantly impact your journey towards homeownership.

About 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.
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