Couples save for just over four years for first home deposit

Jonathan ChancellorDecember 8, 2020

The average time it takes a couple to save for their first house deposit has eased to 4.1 years, a slight improvement from 2010’s figure of 4.3 years.

But it is still substantially longer than five years ago, when it took first-home buyers an average of 3.8 years to get onto the property ladder, according to a Bankwest survey. 

Source: Bankwest (Click chart to enlarge)

First-time buyers saving 20% of their annual income in Sydney have to save for the longest period of time (5.7 years) to buy a house, followed by Melbourne (5.4 years), while those living in Brisbane, Adelaide and Hobart don’t have to save for quite as long (all four years) to get a foothold on the property ladder.

In Perth, Canberra and Darwin it would take a first time buyer 4.2 years to save a deposit.

Source: Bankwest (Click chart to enlarge)

Saving to purchase a first home in regional areas takes 2.7 years, according to the report.

“Over the past year, all capital cities have seen a modest improvement in the time it takes a first-home buyer to purchase their first property,” Bankwest senior analyst Tim Crawford says.

“But if first-time buyers located in capital cities around Australia started saving now they would be in a position to purchase their first home in early 2016, whereas in regional areas this would be in autumn 2014.”

The report notes that in the past financial year there were 90,210 first-home buyers across Australia, which was 35% lower than the previous year and represented a seven-year low.

Based on a 20% deposit for the median national house price ($437,500), first-home buyers across Australia would need to save an average of $80,500, compared with $62,100 in mid-2006.

Across capital cities, first-time buyers have to save an average of $93,313, which is $24,613 more than five years ago.

The report notes over the past five years house prices have risen by 27% compared with a 21% increase in wages.

It is based on a 25- to 34-year-old couple saving 20% of their combined pre-tax income annually.

“In order for the property market to prosper there needs to be a consistent number of first-time buyers as historically this has been the catalyst for growth in the sector,” Crawford notes.

For apartments, the longest savings times for a deposit for the median unit are in Sydney (4.1 years) and Melbourne (4.1 years).

The smallest savings times for a unit deposit are in Hobart (2.9 years) and Adelaide (3.1 years).

The data for the First Time Buyer Deposit Report was derived from the Australian Bureau of Statistics census, the ABS Wage Price index with house prices from Residex.

Bankwest’s researchers analysed local incomes of potential first-time buyers – measured by census data on incomes of 25-to 34-year-olds – along with local house and unit prices.

Calculations are based on first time buyers saving 20% of the median house or unit price, including available first home owners’ grants.

Deposit savings times have been calculated on the basis of a first time buyer couple setting aside 20% of their combined pre-tax income annually.

The calculation assumes the savings are deposited in an online savings account each month and earn interest on this basis. Interest earned is assumed to be taxed at an individual’s marginal tax rate.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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