Homebuyer hell: Huge ask for new school leavers to save for a house

New data has revealed SA school leavers will need nearly two decades to save enough for a home deposit. See how we compare to the rest of the nation.

Parents, get ready to enjoy your children’s company for a while yet.

New research reveals how long SA school leavers will need to save for in order to buy a median-priced house and, let’s just say it’s not a short-term proposition.

According to Finder.com.au analysis, it will take today’s school leavers almost two decades to save enough of years to be able to afford their own home.

The data shows it would take a school leaver today 17 years to save up the 20 per cent deposit needed to buy a median-priced, $677,014 house.

Those looking to buy a median priced unit – currently with a $469,528 median – would need to save for nine years.

By that time, assuming house price growth continues at the same rate it has over the previous 17 years, Adelaide’s median house price would be $1,420,189, while Adelaide’s median unit price would have climbed to $666,323.

Finder’s head of consumer research Graham Cooke said the figures showed buying a home was becoming a “pipe dream” for many young Aussies if they didn’t have family support.

“For most people, wage growth simply isn’t keeping pace with skyrocketing property prices; while the bank of Mum and Dad makes it easier for some to enter the property market, not all will have that privilege,” Mr Cooke said.

“Parental support can significantly lower the initial hurdle of saving up for a house deposit, allowing quicker entry into the market, smaller loans, and a better chance of loan approval.”

He added that buying a home required an incredible amount of planning, research and sacrifice as purchasers had to borrow, work and save more for their loan repayments and stamp duty.

Finder’s head of consumer research Graham Cooke. Supplied

“Make sure you’re across the schemes, grants and incentives that can help you buy a home,” he said.

“The best thing you can do is to set yourself a budget.

“Budgeting gives you financial freedom because it lets you allocate money towards ‘fun’ expenses like brunch, Netflix and daily coffees without feeling guilty or that you’re putting your financial future on the line.

“Secondly, open a high-interest savings account with a solid ongoing rate of at least 5 per cent, and put as much money in it as possible.

“Look for ways to stretch your dollar even further.

“Make sure you’re not paying for things you don’t need or aren’t using, and don’t pay too much for what you do need.”

While SA’s youth will need to save for just shy of two decades to buy a house, school leavers in New South Wales will need to save for a whopping 44 years to rustle up enough money for a 20 per cent deposit on a median-priced house, and for 20 years to accumulate a deposit for a median-priced unit.

Finder’s analysis assumes the average 10-year growth rate for each state would continue for another five years. Beyond five years it applied an annual general growth rate of 3.5 per cent across all states.

The analysis also works off the fact the average Australian moves out of the parental home at 24 and assumes they are able to save a higher proportion of their earnings – 40 per cent – while there.

Out of home, the analysis assumed 22 per cent of discretionary income on an average part-time university student salary of $25,655 would be saved, with the income increasing 10 per cent after five years, and a further 3 per cent annually for remaining 13 years for houses, and four for units.

Ray White SA chief auctioneer John Morris.

Ray White SA chief auctioneer John Morris said it was increasingly difficult for first homebuyers to enter the market.

“What I’ve seen since Covid is budgets increase – they’ve gone to their lenders and borrowed more or they’ve moved further afield – they’ve had to move a few suburbs away from their ideal location where they get more bang for their buck.

“At auctions there are very rarely young couples who aren’t with older relatives, hopefully with a cheque book or a big wallet.

“I think the price growth will settle, I think it has to. I don’t think we’ll have a crash, but hopefully it will slow to a certain degree which will hopefully bring down that time needed to save.

Mr Morris said he was seeing families increasingly looking for homes that will accommodate their children for longer.

“I’m also seeing a lot of people looking at homes that can accommodate multiple generations,” he said.

“Properties with granny flats or room for one are also increasingly popular.”

Riley toils to make his dough

While other SA school leavers might be saving for almost two decades for their first home, storeman Riley Brown is hoping to achieve his goal within the next three or four years.

Mr Brown, 17, left Sacred Heart College at the end of year 9 to work at his parents’ wholesale bakery Unique Homestyle Foods at Richmond and get a headstart on saving for a home deposit.

Riley Brown, left, is currently saving for a house deposit. He’s worked at the family business since he was 15. Pictured with brother Corey, 22, Preston, 8, and mum Blaise. Picture: Dean Martin

MORE NEWS:

Luxe waterfront homes coming to Taperoo

Legendary chocolate maker’s estate hits market

Mapped: Find out the average rental price in your suburb

Valuer-General’s April figures: What your suburb is worth

“I was getting good grades and enjoyed school but I’ve always been more a hands-on type of person and I started having thoughts of going into the family business rather than going to uni,” he said.

“We had lots of talks with my parents and the school to make sure I was making the right decision.”

Still living with his parents in order to save as much as possible, and also working at city bar Atlantis, Mr Brown said his prime goal has always been saving a deposit for a house – a goal he is “between half and three-quarters” of the way towards achieving.

“I love the independence I have and being able to save – I’ve been working between 36 and 42 hours a week for the past two-and-a-half years and I’m very excited about one day being a homeowner,” he said.

“There’s no real easy way to get money – you’ve got to put in the work and save hard.”

Mother Blaise Brown says she was proud to see her son commit to achieving his dream.

“It’s hard for kids these days, I feel it will be the parents’ job now to work harder and smarter to be able to give the leverage to their children,” she said.

“I feel like the next generation will be reliant on our generation to help them achieve the Great Australian Dream.”

HOW SCHOOL LEAVERS CAN GET A HOME SOONER

– Set yourself a budget.

– Open a high-interest saving account with a solid ongoing rate of at least 5 per cent and put as much money in as possible,then don’t take any out.

– Make your savings work for you by investing, if you are comfortable with the risks.

– Assess your spending habits: don’t pay for things you don’t need or aren’t using, and don’t pay too much for what you doneed.

– Consider working a trade instead of going to university as it will most likely get you a home sooner.

– Understand what the cost is of the home you want to purchase and develop a saving strategy.

– Don’t expect the first home you buy to be a dream home, work towards buying a good stepping stone.

– The sooner you get on the property ladder, the better as it means less time chasing a potentially rising housing market.

– Buddy up! Plan to purchase a home with a friend, family member or partner so more than one income can be used to save adeposit and service a mortgage.

– Be across and work towards bank and government schemes, grants and incentives that can help you buy a home.

Originally published as Homebuyer hell: Huge ask for new school leavers to save for a house