Housing boom blows out time it takes to save deposit, says new report

Ian Bushnell 25 June 2021 11
Canberra suburbs Coombs and Wright

First-home buyer country: the suburbs of Coombs and Wright in the Molonglo Valley. Photo: File.

Couples saving for their first home in the ACT will need to wait almost twice as long to garner a 20 per cent deposit for a house than a unit, and will pay nearly $300,000 more for a house.

The 2021 Domain First-Home Buyer Report says it now takes six years to save for a deposit for an entry level house, while aiming for a unit will only take three years and five months, a savings period that has remained steady during the past 12 months.

But the annual increase for Canberra couples wanting a house is the largest in Australia at nine months, reflecting the surge in prices during the past year.

The report, which identifies the time it takes first-home buyer couples to save a 20 per cent deposit for an entry priced home across our capital cities, also says Canberra has the largest price difference between property types, with an entry level price gap of $294,000.

The report also reveals the areas and number of bedrooms in a property that are the quickest to save for.

If you are after a four-bedroom house, the deposit wait blows out to six years and 11 months. For a three-bedroom house, it comes back to five years and three months. For a two-bedroom house, it will only be four years.

The quickest path to home ownership is a one-bedroom unit, which will only take two years and nine months to save a deposit for, while a two-bedroom unit will take three years and six months, and a three-bedroom unit will take four years and eight months.

By area, the increases were most pronounced in Canberra, in which 88 per cent of the ACT needs more time to save for a house deposit.

While the time to save for units fell in Sydney and Melbourne, 71 per cent of Canberra went the other way.

Domain said the two Federal Government incentive schemes – First Home Loan Deposit Scheme (FHLDS) and the First Home Super Saver Scheme (FHSSS) – are making a difference for people who can access them, shortening the deposit saving period.

A five per cent deposit can mean only a one-and-a-half year wait for a house, and just 10 months for a unit.

For those using the FHSSS, saving for a house deposit can take three years and five months, and again just 10 months for a unit.

While low interest rates have cut repayments, they have also driven the big price increases of the past year.

On average across the cities, the amount of income required to service a mortgage repayment has declined from 24 per cent in 2012, to 18 per cent in 2021, for an entry priced house. However, in Canberra this is 22 per cent. For units, it is the same as the city average of 13 per cent.

Domain said this year first-home buyer loans reached the highest number since 2009, but have been falling in recent months as affordability toughens and government assistance tapers.

“Saving a deposit is a tall order in the current rapidly rising housing market,” it says.

“This has created a growing sense of urgency among entry-level buyers, and may mean a compromise on their ‘ideal home’ to mitigate missing out.”

The report is based on the average income for a couple aged between 25 and 34 years in each capital city using ABS Estimates of Personal Income.

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11 Responses to Housing boom blows out time it takes to save deposit, says new report
Joseph Ciccarone Joseph Ciccarone 8:21 pm 29 Jun 21

wow I didn't know that

DrLin DrLin 2:09 pm 28 Jun 21

I obviously did something wrong, it took almost 25 years to save my deposit, and all that was needed was 10% at that time, and the house was only $450k.

jorie1 jorie1 1:02 pm 28 Jun 21

When house prices rise, rates and other land taxes rise too, as it’s all based on the value of the land. It is in the interest of the ACT government to have high house prices and they will do everything they can to keep house prices very high, as it means more taxes for them. Watch all the land rates keep going up and up…
Was thinking of buying an investment property in Canberra, but have instead gone to another state where they don’t exorbitant land tax, don’t charge exorbitantly high rates and where they don’t cap the rents that landlords can charge for their own property.

Matt Brokenbrough Matt Brokenbrough 12:39 pm 28 Jun 21

Great opportunity for NSW to jump in and develop land around the border and get more rate payers onto this side of the border.

Unfortunately all the development is focused on the Badgerys Creek aerotropolis and Sydney's north west and south west corridors. Sydney and Canberra are way over priced. At least if NSW development land around the ACT, most of the infrastructure and entertainment is already provided by the ACT.

    Simon Wheaton Simon Wheaton 2:02 pm 28 Jun 21

    Matt Brokenbrough South Jerrabomberra, Googong, Ginninderry.

Capital Retro Capital Retro 1:15 pm 27 Jun 21

The FHLDS is something I thought I would never see initiated by a so-called fiscally conservative government. It is similar to the actions of the Clinton Administration in the USA who supported a program to get renters and loan denied people into cheap and affordable (in the short term) home ownership in return for votes. It became the sub-prime mortgage catastrophe when interest rates rose and repayment schedules escalated. It led to the first GFC in recent years – GFC2 is just around the corner.

Most Australians who participate in this dumb scheme will be buying the first and last home and taxpayers will be picking up the tab.

    chewy14 chewy14 2:21 pm 27 Jun 21

    You clearly don’t know how the scheme works or the potential (small) risks involved if you think it’s remotely like the equivalent of what caused the GFC.

    The government is basically just guaranteeing 15% of the property deposit so the first home owners don’t have to pay mortgage insurance.

    It’s only open to people who meet the lending criteria which is fairly strict.

    And It’s also limited to below certain house prices and for a set amount of places each year, which is currently 10000 for 21-22.

Joel Suryawanshi Joel Suryawanshi 12:18 pm 27 Jun 21

There's a crash coming. Banks are loaning money they don't have. Who's going to service Australia's debt.

Pam Perkins Pam Perkins 12:02 pm 27 Jun 21

Give it two years when interest rates rise and over committed people cannot afford repayments bide your time if you can

Charlie McDonald Charlie McDonald 10:04 am 26 Jun 21

Steven McDonald looks good for your house

    Steven McDonald Steven McDonald 10:06 am 26 Jun 21

    Charlie McDonald excellent.....

    I'll wait for a flood in Brisbane, then buy something on the waterfront

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