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A new report has revealed that the time it takes for an average Aussie couple to save for their first home has blown out by 11 months over the past year, according to a new report.
Domain has released its annual First Home Buyers Report for 2022, revealing the impact growing prices are having on already stretched affordability.
The report identifies the time taken for a couple aged between 25 and 34 to save a 20 per cent deposit for an entry-prices property across each of Australia’s capital cities and the regions – based on average dual income.
For couples aiming to buy a house, the period of time taken to purchase a house has stretched out by 11 months compared to just one year ago, thanks to burgeoning house prices. For couples who are looking at units, it’s taking an extra three months.
While houses and units have both seen price growth over the past 12 months, Domain noted that the difference between saving for an entry-level house or unit is “continuing to widen”.
“Across our capital cities, purchasing a unit potentially result[s] in buying your first home two years and two months earlier than a house,” it said.
In Sydney, the situation is most grim. Couples looking to live in the harbourside city can expect to spend eight years and one month saving to buy an entry-level home.
Canberra has overtaken Melbourne for second place. Residents in the national capital can expect to spend seven years and one month saving for a deposit.
Domain has acknowledged that for first-time buyers, it means the prospect of saving the lump-sum deposit is becoming more challenging.
“Testament to this is that over the past 20 years, average annualised growth in capital city dwelling prices has been over double that of the annualised wage price growth,” it said.
Weighing in on the matter, Domain chief of research and economics Dr Nicola Powell said that 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”.
The situation is less concerning for the smaller capital cities. Perth remains the best city for first-time buyers, with Domain calculating that the average couple can buy a house within just three years and seven months.
Darwin and Adelaide aren’t too far behind, at four years and three months and four years and seven months, respectively.
Despite the disparities, it’s not all doom and gloom.
Dr Powell has also noted that the decentralisation of the workforce is having the effect of “awakening affordability” – allowing them to look further afield for greater value for money – and prompting a rise in keyword searches for “lifestyle”, “space”, “garden” and “yard”, according to Domain.
“When navigating the first home buyer’s market, considering property type and location, or even becoming a rentvestor, can all be worthwhile,” she shared.
“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,” the economist concluded.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
