Young Sydneysiders’ shocking home buying reality

Shock new data reveals how long it will take current school leavers to save to buy a house and they may almost be ready for retirement by then.

Finishing high school this year? The good news is that if you work hard and save your money wisely, you will be able to save a deposit for a house. The bad news is that it won’t be until you’re 62 years old.

That’s according to exclusive new research from comparison site Finder, which analysed income and house price data and found the average NSW school leaver would need to save for a whopping 44 years to be able to put a 20 per cent deposit down on a median priced house, which is currently worth $1.245 million in Sydney, but would balloon to $7.662 million by 2068.

New analysis has revealed it will take school leavers in NSW a whopping 44 years to be able to save a 20 per cent deposit for a home. Picture: Justin Lloyd.

Finder head of consumer research Graham Cooke said the study showed how much buyers rely on the bank of mum and dad, with equity from the family home the only way into the market for many and wages alone no longer cutting the mustard.

“Wage growth simply isn’t keeping pace with skyrocketing property prices,” Mr Cooke said.

Pockets of hope open up for struggling Sydney homebuyers

It would take less than half the time- but still 20 years- to save a deposit for a median priced unit, currently worth $819,978, but predicted to cost more than $1.5 million in 2044.

“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 … (though) not everyone will have access to that privilege.”

Grantham Buyers Agents director Dan Grantham said the overwhelming majority of his Sydney property buying clients in recent years were being financially assisted by their parents; even those approaching middle age.

Help from parents can help get first home buyers into the property market. Picture: Tom Parrish

“Generational wealth is the edge that buyers need to be competitive,” Mr Grantham said. “It’s commonplace to have generational wealth from $50,000 up to $1 million in some cases helping buyers secure that dream home.”

‘IMPOSSIBLE WITHOUT HELP’

Parental help generally comes in the form of loan agreements or unconditional gifts, Mr Grantham said. Without the help, it would simply be impossible for many of his clients to buy.

“We have a significant supply issue in Sydney, there are limited options to choose from and not enough new homes being built. With record migration and many expats looking for additional investments it’s created an incredible amount of competition,” he said.

“There are only a handful of people I can think of (aged) under 30 that have purchased without assistance from the bank of mum and dad.”

For the research, Finder analysed the median income a student earns while they are at university and the median income they earn once they leave university and enter the workforce.

Finder analysed the income a student earns while at university and the median income once entering the workforce to determine how long it would take school leavers to save for a house. Picture: Jonathan Ng

The findings are also based on median property price data and the average price growth over the last 10 years in forecasts.

Mr Cooke said units offered a far easier entry point than houses, but even then, first time buyers faced significant challenges.

“(Buying) requires an incredible amount of planning, research and sacrifice,” he said.

“It means borrowing more, working more, and putting aside more money towards loan repayments and stamp duty.

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

NSW school leavers were the worst off in Australia, with the research showing the national average was 25 years of saving for a house and 13 for a unit. Victorians were right on the national average for houses and units, while Queenslanders would need to save for 20 years for a house and 10 years for a unit.