Domain has released its First Home Buyers Report, revealing the locations offering the quickest path to purchase (based on time to save a 20 per cent deposit) and the lowest entry prices for first home buyers across Australia’s capital cities.
“The report aims to make it easier for home hunters to determine the areas that offer the most promise based on locations that offer the quickest path to purchase, budget and proximity to the nearest CBD. While there are many factors to consider when making a purchase, the report shows there are options across every capital city,” said Domain’s Data Scientist, Dr Nicola Powell.
Greater Sydney
“While Greater Sydney has the longest path to purchase, buying your first home has been improved by government policies designed to aid market accessibility. The incentives are enabling a higher degree of homeownership suggesting transfer (stamp) duty was a barrier. In fact, from July 2017 to April 2018 almost 23,000 first home loans were financed in NSW, jumping 76 per cent from the year prior.
“From the top 20 areas identified, seven fall below $650,000, meaning they are eligible for transfer duty exemption. A further five LGAs priced between $650,000 to $800,000 are eligible for concessions on transfer duty. As for units, all LGAs included in the top 20 are exempt from transfer duty.
“In additional good news, the time taken to save for an entry price unit deposit in Greater Sydney remained the same as last year with houses increasing by only one month.”
“For first home buyers looking to purchase in Greater Sydney, there are a variety of options depending on budget and lifestyle priorities.
“For buyers who want a quick entry to market, areas like Wyong on the Central Coast offer a relatively low entry price at $483,000, and the time to save a 20 per cent deposit of 4.7 years.
“Those looking for something closer to the city centre can consider units in the area of Canterbury, approximately 13 kilometres from the Sydney CBD, with an entry price at $475,000 and a time to save of 4.6 years.”
Greater Melbourne
“Entry level home buyers in Greater Melbourne experienced the biggest jump in the time taken to save for a house, adding an extra eight months from last year. This is likely an impact of the influx of first home buyers increasing demand at the lower end of the market.
“Despite this increase, Melbourne house prices and savings duration remain below Sydney.
“And a number of market indicators – including declining weekend auction clearance rates – suggest demand will start slow this year, particularly if credit becomes more difficult to secure.”
“If you’re looking to purchase a unit in Greater Melbourne there are more entry-level suburbs to choose from within striking distance of the CBD.
“For houses, nine LGAs within Greater Melbourne fall below $600,000, making them exempt from transfer (stamp) duty for first home buyers. A further six LGAs are eligible for a concession on transfer duty, with entry prices between $600,000 – $750,000. The entry unit price of all LGAs in Greater Melbourne are exempt from transfer duty.
“Almost 30,000 first home loans have been financed since the Victorian government abolished stamp duty for first home buyers — an increase of 37 per cent compared to last year.”
“Those looking to purchase quickly can look to areas like Melton, where the entry house price is $424,000 and the time to save a deposit is 4.3 years. For house hunters looking to be closer to the CBD, areas like Maribyrnong, approximately nine kilometres from Melbourne’s CBD, are a strong option with unit entry prices at $360,000 and a time to save of 3.7 years.”
Greater Brisbane
“First home buyer numbers have risen in Queensland, likely stimulated by the First Home Owners’ Grant, an incentive available for new homes valued under $750,000. This is one of the most generous grants of all the states, providing a first home buyer $20,000. Introduced in 2016, this measure was only meant to last for six months but was extended due to its popularity. As of 1 July, Queensland is set to reduce this grant to $15,000.
“In Greater Brisbane, the time needed to save for an entry level deposit on a house has increased by one month from last year, bringing the total time to 4.2 years, while the time to save for an entry level deposit for units fell by three months, to 3.3 years.”
Greater Adelaide
“The entry price for houses and units in Greater Adelaide are the lowest of any mainland city, however the proportion of first home buyer activity is consistently the lowest of all the states and territories in Australia. The journey to home ownership has become harder in South Australia, as low wages growth coupled with housing price increases, creates a difficult market to buy in.
“The amount of time needed to save for an entry price deposit on a home or unit has increased in Greater Adelaide by one month for homes and two months for units.”
Greater Perth
“Greater Perth is the second most accessible capital city for purchasing a home with a relatively low entry price and quick path to purchase.
“Softening market conditions in Greater Perth has made the path to homeownership quicker for houses and units compared. It is a month quicker to save for an entry price house deposit compared to last year, and two months quicker for entry price units.
“First home buyers are making the most of purchasing conditions, with the state having the highest proportion of entry-level buyers of all the states and territories in Australia”.
Greater Hobart
“For those looking to buy a home, Greater Hobart is one of the most accessible capital cities in Australia with the lowest entry price for houses. However, when LGAs are considered, accessibility is driven by the affordable outskirts. The LGA of Hobart takes approximately 6.3 years to save for an entry price home deposit, which is almost on par with the average time to save for a deposit in Greater Sydney (6.7 years).
“Despite Greater Hobart requiring the shortest time to save of all the capital cities, this has increased by three months for houses and four months for units compared to last year, a result of a strong, growing market outpacing wages.”
Canberra
“Canberra was designed as a satellite city with hubs across the territory, with the most affordable areas being predominantly on the territory fringe. The time needed to save an entry price deposit for a home has increased in Canberra by two months to 4.8 years, while the time needed for a unit has remained stable at 3.3 years.
“While the ACT government abolished stamp duty on new and established homes for first home buyers on an annual household income of $160,000 or less, it’s set to introduce a new policy next year. Once new initiatives are in place, an influx of first home buyers are expected. It’s likely we’ll see house hunters wait for the new initiative to kick in, giving time to grow savings and consider a purchase in established suburbs.”
Greater Darwin
“The time needed to save for a house or unit has dropped dramatically over the past year in Greater Darwin. It’s now 11 months quicker to save for an entry price house deposit and nine months quicker to save for an entry price unit deposit. Along with Greater Perth, Greater Darwin is the only other city where the savings journey is shorter for both houses and units than the previous year.
“The market has softened in Greater Darwin shaving significant time off the journey to saving a deposit, which is a win for first home buyers.”
Methodology
Entry prices are based on the 25th percentile of the respective geographical boundary. This gives a clear indication of the prices at the more affordable end of the housing market that is deemed to be more in line with a first home buyers’ budget.
The amount of time required to save a 20 per cent deposit is calculated by comparing salary and entry-level price. A deposit of 20 per cent is used to avoid incurring additional costs of lenders mortgage insurance. With the average age to purchase a first home being 34, the report is based on the average income for couples between 25-34 years old in each capital city. ABS wage data is used to provide an estimate of current salary by factoring wage price growth using the ABS Wage Price Index (WPI).
The time required to save a deposit is based on a dual income, with each person saving 20 per cent of their post-tax income monthly that is deposited in a standard online savings account (interest earned is taxed at the individuals’ tax rate).
