The average deposit required by first home buyers has topped six figures as record low borrowing costs, stimulus payments and low stock levels send prices racing higher.
Recent Australian Bureau of Statistics data has revealed the national average deposit needed to secure a mortgage is now $106,743—an increase of 16 per cent since January, 2019.
It is the first time in Australia's history the average deposit has exceeded $100,000.
For first home buyers it means a longer path towards homeownership with the burden of raising a deposit—based on higher values—greater than ever.
According to comparison website Finder, which surveyed more than 1000 first-home buyers, one in four first home buyers need between five and 10 years to save a 20 per cent deposit.
More than a third of respondents—38 per cent, require between two and five years to save for their deposit.
The ACT had the largest house deposit increase since 2019, with the upfront amount required surging by 24 per cent to $117,790 as the rise in entry-level house prices exceeds wage growth.
NSW was just 1 per cent behind at 23 per cent for an average of $128,469.
The average deposit in Tasmania has climbed to $81,438, in Queensland it is now $95,784 and up to $92,784 in Western Australia.
South Australia remains the only capital city offering stable conditions for first home buyers with the time to save for a deposit for a house or unit remaining the lowest in the country.
First-time buyers' new loan commitments made up 35.1 per cent of February's near-55,000 monthly loans, more than investors’ 22 per cent, and have continued to grow.
While first home buyer loan commitments fell 3.3 per cent in February, they remain near 12-year highs, up 65.8 per cent year on year.
Average first home buyer loan, deposit
| Average first home buyer loan | Average first home buyer deposit | Increase since 2019 | |
|---|---|---|---|
| ACT | $471,161 | $117,790 | 24% |
| NSW | $513,876 | $128,469 | 23% |
| NT | $400,000 | $100,000 | 20% |
| TAS | $325,751 | $81,438 | 17% |
| VIC | $452,369 | $113,092 | 16% |
| WA | $371,048 | $92,762 | 14% |
| QLD | $383,136 | $95,784 | 13% |
| SA | $342,840 | $85,710 | 8% |
| Australia | $426,971 | $106,743 | 16% |
^Source: Finder, ABS loans data. Analysis assumes a 20 per cent deposit
The pandemic-induced downturn that gripped the nation for much of 2020 cut nearly half a year off the time needed to save for a deposit, according to figures published by the Australian Institute for Progress earlier this year.
The national figures showed an improvement due to the price falls in Australia’s two biggest cities during the quarter, even as the situation in individual cities varied.
Repayments and deposits fell in Sydney, Melbourne, and Hobart but rose in Brisbane, Adelaide, Darwin, Canberra, and Perth.
Finder spokeswoman Sarah Megginson said that saving for a house deposit is a big financial hurdle for first home buyers, with more than half of first home buyers—53 per cent—spending more than 30 per cent of their income in order to meet mortgage repayments.
“Prospective buyers are being stumped by a supercharged property market, which isn’t showing any signs of slowing down just yet,” Megginson said.
“Low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit.”
Record low interest rates—RBA governor Philip Lowe has said the benchmark cash rate would likely stay at 0.1 per cent for the next four years—are keeping repayments low.
Current interest rates have also pushed home values to new highs while making the return on any savings minimal.
The surging prices that last month pushed the housing market up 2.8 per cent, the fastest pace of appreciation in 32 years, have created several inflection points across the market with Sydney and Melbourne staging a full recovery from earlier downturns.
At the same time, data released by the REIA showed housing prices had soared by more than 500 per cent during the past 25 years, with the median price surging from $160,000 in 1996 to $825,000 in 2020.
