First-home buyers in Sydney and Melbourne will need to save for up to six-and-a-half years for a deposit to purchase an entry-level house, according to a new report from Domain.
But softening housing markets in recent months could help to support affordability with first home buyers most likely to benefit from price declines, Senior Research Analyst Dr Nicola Powell says.
“Although the majority of capital cities saw the journey to homeownership become a little longer compared to the same time last year, in recent months weakening prices will eventually translate to improved affordability,” Powell said.
Domain’s First Home Buyers Report shows the amount of time required to save a 20 per cent deposit for an entry-level house and unit for a couple aged between 25-to-34 years old on an average income in each capital city.
Entry prices are based on the lower 25th price percentile of the housing market.
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Greater Sydney has an entry-level house price of $680,000. It takes six and a half years for a couple on average Sydney incomes to save a 20 per cent deposit, Domain has found.
“While first-home buyers have traditionally sought further-afield seeking value for money, the current health crisis could accelerate this trend as working from home becomes the new norm,” Powell says.
As such, the report notes that it’s fastest to save for a house in the Central Coast, Outer South West, Blue Mountains, Baulkham Hills and Hawkesbury.
Those desiring to be closer to the city will find prices have improved for entry-level units in Auburn, Parramatta, Merrylands-Guildford and Canterbury.
Time to save 20pc entry-level house deposit for a couple aged 25-34 years old
| City | Entry price | Time to save | Annual % change | Time to save a 5pc deposit |
|---|---|---|---|---|
| Sydney | $680,000 | 6 years 6mnths | 2.6% | 1 year 7mnths |
| Melbourne | $600,000 | 6 years | 2.9% | 1 year 6mnths |
| Brisbane | $450,000 | 4 years 6mnths | 1.9% | 1 year 1mnth |
| Adelaide | $375,000 | 3 years 11mnths | 0% | 11 months |
| Perth | $366,580 | 3 years 5 mnths | -2.4% | 10 months |
| Hobart | $380,000 | 4 years 2mnths | 6.4% | 1 year |
| Darwin | $362,000 | 3 years 1mnth | -2.6% | 9 months |
| Canberra | $606,060 | 5 years 5mnths | 6.6% | 1 year 4mnths |
^ The amount of time required to save a 20 per cent deposit is calculated by comparing salary earnings with entry-level house and unit prices, Domain.
In Melbourne, Powell says an entry-level unit will take four years and three months to save a deposit for, and six years for an entry-level house deposit.
Powell says Melbourne’s growth corridors are key areas of affordability, and include areas such as Melton-Bacchus Marsh and Wyndham, or Sunbury for entry-level houses.
For entry-level units, areas include Tullamarine-Broadmeadows, Wyndham, Melbourne City and Manningham-West.
Brisbane timeframes include four-and-a-half years to save for an entry-level house deposit and just over three years to save for a unit.
“Cleveland-Stradbroke, Bald Hills-Everton Park and Kenmore-Brookfield-Moggill had a reduction in the time taken to save an entry-level house deposit, bucking the overall trend for Greater Brisbane,” Powell notes.
“Those vying for the quickest hop on the property ladder will need to look towards Ipswich, Moreton Bay and Logan-Beaudesert region for the quickest saving times.”
Time to save 20pc entry-level unit deposit for a couple aged 25-34 years old
| City | Entry-level unit price | Time to save | Annual change % | Time to save 5% deposit |
|---|---|---|---|---|
| Sydney | $585,000 | 5 years 7mnths | 1.5% | 1 year 4mnths |
| Melbourne | $424,500 | 4 years 3mnths | 2% | 1 year |
| Brisbane | $328,000 | 3 years 3mnths | -4.9% | 9 months |
| Adelaide | $285,000 | 3 years | 0% | 9 months |
| Perth | $257,000 | 2 years 5mnths | -3.3% | 7 months |
| Hobart | $320,000 | 3 years 6mnths | 2.4% | 10 months |
| Darwin | $200,000 | 1 year 8mnths | -9.1% | 5 months |
| Canberra | $370,000 | 3 years 4mnths | 0% | 10 months |
^ Based on average income for a couple in each capital city using ABS figures. Incomes are based on the average employee earnings in each Greater Capital City.
The path to purchase in Perth is now 6 months quicker compared to 2015, as wage growth outperforms house price growth, the report notes.
“Outer suburban areas offer the quickest hop onto the property ladder with houses in Kwinana, Armadale and Gosnells,” Powell said.
Buyers in Perth and Darwin have a shorter time span to save for a home deposit, with the average time taking less than three and a half years.
