It now takes average couples an extra 11 months to save for a deposit on an entry-level house compared to the same time last year, according to new research.
The latest Domain First Home Buyers Report noted the time it takes a couple aged between 25 and 34 to save a 20 per cent deposit for an entry priced property has ballooned on the back of the rapid increase in house prices.
It now takes an average couple five years and eight months to save a deposit for houses in the major capital cities, with Sydney blowing out to eight years – a jump of 18 months over the past year.
Canberra has overtaken Melbourne in second place, at seven years and one month, while Canberra has also seen the equal largest increase over the past year, jumping by 18 months.
Perth is still the most affordable city for first home buyers, with the fastest time to save for a deposit at three years and seven months for an entry-level house, less than half the time taken in Sydney.
Perth has only seen an increase over the past year of one month and has even declined by one month over the past five years.
Fortunately, for first-home buyers, the time to save for a unit is still significantly shorter than houses. The time it takes to afford a unit deposit in the capital cities increased by only three months, taking the total time to three years and six months.
The difference between saving for an entry-level house or unit across the capital cities is continuing to widen.
It’s now possible to purchase a unit two years and two months earlier than a house.
Domain’s Chief of Research and Economics, Dr Nicola Powell said purchasing a home is becoming increasingly prohibitive for first home buyers.
“First home buyers are facing a growing financial hurdle when it comes to saving a deposit, and this is becoming more daunting in the context of rising living costs, low wage growth, weak saving rates and the rapid rise in property prices,” Dr Powell said.
“Our hope with this report is that we are able to equip first home buyers with the latest information to help consider location, size and type of property as they embark on their property journey.”
Dr Powell said the ability to work from home has given many homebuyers more flexibility and allowed them to look further afield to find properties that offer more lifestyle features.
“The decentralisation of our workforce is being embraced by middle Australia, with some working from home, even if it is for a couple of days a week, and awakening affordability,” she said.
“In saying this, we know that not everyone is able to do this, with often lower-income workers needing to be close to their workplace as they are unable to work from home.”
Dr Powell said first-home buyers should also look at different strategies to get their foot in the door.
“When navigating the first home buyer’s market, considering property type and location, or even becoming a rentvestor, can all be worthwhile,” she said.
“Government incentives such as the First Home Loan Deposit Scheme or the First Home Super Saver Scheme, which allows prospective first-home buyers to make additional superannuation contributions that are later accessible for a first home deposit, can also be advantageous to shave years off the time it takes to save for an entry-priced deposit.”