More first time buyers enter housing market but saving for deposit an uphill task: Bankwest
Nearly 95,000 first homes were purchased in the year to August 2017, the highest figure since June 2015, says a new report from Bankwest.
Even though the 94,135 first homes bought till August represent a year-on-year increase of 5.6%, and a slightly cooling property market, the 2017 Bankwest First Time Buyers Report shows the amount of time Australian first time buyers will take to save for a deposit is still on the increase.
The data also showed that the first home buyer figure accounts for 14.3% of all purchases over the same period.
The report shows first time home buyer couples (FTB) will have to save for an average of 4.6 years to accumulate the $111,080 needed for a 20 per cent house deposit on a median priced home. This is three months longer than in 2016 (4.4 years) and a $7,173 increase on the $103,907 deposit required last year.
FTB couples on average took two months longer to save for a deposit in the major cities except Perth and Darwin, said Bankwest general manager Personal & Small Business Banking, Donna Dalby.
“Perth and Darwin as cities buck the national trend, being the two places where the savings times for first time buyers have dropped year on year. Perth’s house prices have dropped by 4.3% which means the saving time to get the 20 per cent deposit of $103,046 (down $4,627 from 2016) has dropped by three months to 3.9 years,” she said.
“Likewise WA as a whole is the most accessible mainland state for first time buyers. Our report shows in WA it takes 3.6 years to save the necessary $94,651 deposit.”
“Low interest rates and a 6.9% increase in house prices with sluggish wage growth of only 2% during the same period are making it increasingly difficult for first time buyers to get a foot on the property ladder.
“While lower interest rates are beneficial for those who already own their homes in the form of lower loan repayments and interest, they can also bring more buyers into the market and this can drive up house prices, making home ownership less affordable for first time buyers.”
However, Perth’s Peppermint Grove defies the notion of WA’s accessibility and the local government area (LGA) has the longest savings time in all of Australia.
The salubrious suburb takes this unenviable title with a saving time of 21.2 years to save the $672,944 deposit need to put down a deposit (down from 21.7 years a year ago). The suburb of Mosman on Sydney’s north shore is threatening to end Peppermint Grove’s long reign, with the average couple needing 20.4 years to save a deposit – four years longer than in 2016. This is largely due to Mosman house prices appreciating by almost a third (29.8%) in the year to June 2017.
The report suggests that FTB couples could get on the property ladder quicker if they opted for an apartment instead of a house.
The average savings time for a unit across Australia is 4.2 years, 5 months less than the what’s needed for a house.
“Everyone dreams of having their own house but medium and high density housing is on the increase across the country and can offer a noticeably quicker route to home ownership than aiming at a house purchase,” said Donna.
At the other end of the scale the LGA of Dundas in south eastern WA is the area with the shortest saving time – just 0.7 years are needed to save the necessary 20% deposit of $16,346.