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New research has revealed that buyers saving for a unit deposit will take nearly two years less than for a house, making units the fastest route for first-time buyers to enter the property market.
The latest version of Domain’s First Home Buyer Report has revealed that a typical 24–35 year-old couple, on average wages, takes around 20 months less to save for a 20 per cent deposit on an entry-priced unit than on an entry-priced house.
Data showed that it currently takes five years and one month to save up for a deposit on an entry-priced house across the combined capitals, which is one month longer than it took this time last year.
Additionally, data showed that it now takes an average of three years and five months to save for a deposit on an entry-priced unit across the combined capitals, two months quicker than it took first home buyers a year ago.
Domain’s chief of research and economics, Dr Nicola Powell, said the report highlights the challenges first home buyers face when trying to purchase a property.
“In the past five years, entry house prices have increased 58 per cent, while unit prices have risen by 27 per cent. Meanwhile inflation surged 20 per cent and wages only grew by 15 per cent,” Powell said.
“This shows the growing gap between earnings and property costs, making it harder for first home buyers to get into the market.”
The report showed that Sydney is the city where it takes the longest to save for either type of housing: six years and nine months to save for an entry-priced house and four years and four months for an entry-priced unit.
Even in Sydney’s Wyong and Wollondilly suburbs, where it takes five years and 11 months to save for a deposit on an entry-priced house – the shortest in Sydney – this still exceeds the five years and one month-average across the combined capitals.
While it now takes one month longer to save for an entry-level house deposit in Sydney than it did 12 months ago, the time required to save for an entry-level unit deposit decreased by two months over the year.
“In Sydney, while it’s still the toughest city overall, it’s now 15 months faster to save for an entry-level unit compared to five years ago,” Powell said.
“This is thanks to higher wages, better interest rates on savings and more stable units,” she added.
Contrastingly, Brisbane, Adelaide and Perth were the only cities where the time to save for an entry-priced house or unit deposit increased.
According to the report, the time decrease occurred due to price growth outpacing wage growth and because saving rates were higher in these markets.
Melbourne was the only capital city where the time required to save for an entry-priced house and unit deposit decreased over the past five years.
Domain said this has resulted in Victoria now leading the nation in first home owner participation.
Nevertheless, the report noted that the Darwin market still offers the shortest times required to save for a deposit on either type of housing, with a unit in Darwin offering the quickest avenue to home ownership across the combined capitals.
“Darwin is still the top city for first home buyers.”
“It has the quickest path to home ownership, with just three years and five months needed for an entry-level house and two years and one month for a unit– half the time it takes in Sydney,” Powell said.
Powell said the report shows the affordability challenges first home buyers face and underscores the need for reform to bolster the housing supply.
“These differences highlight the huge gap in affordability across cities, making it clear that coordinated government action is needed to tackle Australia’s housing shortage,” Powell said.
She said the National Housing Accord – which aims to build 1.2 million homes in the next five years – is a “step in the right direction” but emphasised the need for unified government action around housing policy.
“It’s crucial for all levels of government to work with the industry to ensure we have enough affordable housing,” Powell added.
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