Saving for a first home deposit: Does it really take 9 years?

Housing affordability in Australia’s capital cities is no joke. Saving for your first home deposit can seem like not just a challenge, but like climbing Everest. Some suggest avocado toast is to blame, some suggest it’s zoning laws and rental prices. What’s undeniable is the ratio change of household income compared to the median property price. In 2018, this ratio tipped an all-time high of 6.84, with no signs this figure will decrease dramatically any time either.

This ratio means the average household would have to spend 6.81 times their yearly income to afford a property in the suburbs.

With housing pricing continuing to climb and variable interest rates on the upturn too, how fast can first-time buyers actually save for that magical 20% deposit?

The latest CoreLogic Housing Affordability Report shows it takes an average of 9.4 years to save for a deposit on a free-standing home, as compared to 8.5 years in 2013. For apartments, this time frame is the slightly-less daunting, at an average of 8.3 years — a figure which hasn’t changed at all in the last five years.

Committing to significantly tighter pockets and a penny-pinched lifestyle for nearly a decade is enough to make most millennials feel ill. Coupled with HECS debts and rent prices, the Great Australian Dream feels out of reach for many.

For couples who save together, this figure again becomes much more manageable at 4.8 years for 20% and 2.7 years for 10% of their mortgage.

If you’re lucky enough to call the Sunshine State home, however, this may not be as dire news as it seems. Syndey and Melbourne’s property market have a significant influence over national data, and these two cities take out first and second place respectively for the least affordable areas in the country. Queensland’s market is comparably quite stable in terms of prices, so the saving for a first-home deposit isn’t expected to take quite as long.

In Queensland, the figures sit at seven years for a single-income saver, and 4.1 years for dual-income savings. While much more palpable than the national time frames, first-time buyers in Queensland are still struggling to save for their first-home deposit.

If it was as simple as cutting out avocado toast, many more young people would be finding their feet on the property market by now. Instead, there’s a myriad of factors that are contributing to the difficulty that saving for your first home presents. Luckily, living in Queensland isn’t one of them.

Written: 25 September 2018

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