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First home buyers need almost 11 years to save for a deposit

  • December 01 2021
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First home buyers need almost 11 years to save for a deposit

By Jon Bragg
December 01 2021

Saving for a deposit is taking longer than ever, according to a new report on housing affordability.

First home buyers

First home buyers need almost 11 years to save for a deposit

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  • December 01 2021
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Saving for a deposit is taking longer than ever, according to a new report on housing affordability.

First home buyers

New analysis of Australia’s property market has found that households must now save 15 per cent of their gross annual income for 10.8 years to be able to afford a 20 per cent house deposit.

The latest ANZ CoreLogic Housing Affordability report also found that it would take households nine years to save for a deposit on a unit.

In the 12 months to October, property prices have risen 21.6 per cent and several indicators of housing costs have now reached record highs, according to the two firms.

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Senior ANZ economist Felicity Emmett said that the most substantial increases were recorded for the deposit hurdle and home values relative to income, while mortgage serviceability had been less impacted due to low-interest rates.

“The number of loans taken out by first home buyers fell 27 per cent between January and September 2021 as housing values increased at a much faster pace than household incomes,” said Ms Emmett.

The Finance Brokers Association of Australia recently reported that more than half of Australians would not be able to afford an interest rate rise.

ANZ and CoreLogic found that the national dwelling value to income ratio reached a record high of 7.7 in the June quarter, well above the decade average of 6.3.

The portion of income required to service a new mortgage based on a median dwelling value reached 37.2 per cent nationally in June, the highest level in almost a decade.

This figure climbed to 49.1 per cent in Sydney and 41.2 per cent in Melbourne, the two most expensive capital city markets.

It is cheaper to service a mortgage than rent in a growing number of areas of the country, according to the report.

The portion of income required to pay rent rose to a record 32.7 per cent in regional areas compared to 28.2 per cent in the capital cities.

“As borders reopen and workers return to the city, we can expect to see some of these regional affordability constraints start to ease,” said Ms Emmett.

“However many challenges will remain, especially for those looking to enter the market, with significantly higher deposits, a tightening of lending restrictions, and higher mortgage rates all features of the 2022 housing market.”

First home buyers need almost 11 years to save for a deposit
First home buyers
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