Average first homebuyer house deposit hits record $120,000 as prices soar

A mind-blowing new figure has highlighted just how impossible it is to get into the property market as prices soar out of reach.

Sobering new research has revealed the average first homebuyer deposit has reached a record high of $119,560, leaving many Aussies struggling to come up with the cash.

According to the Finder First Home Buyer Report 2022, that figure is 30 per cent more than Australia’s average full-time salary of $90,916.

It means it now takes the average buyer two to five years to save for a deposit, with the record high blamed on surging property prices in 2021.

In fact, the average first homebuyer deposit increased by $11,700 over the year to March 2022 – equivalent to an 11 per cent increase, according to ABS figures.

The Finder research also revealed that 36 per cent of first home buyers took five years or more to save for a deposit, while nearly one in 10 first home buyers required a decade or more to save enough money for a deposit, which is a slight decline from 11 per cent last year.

A further 25 per cent need between five and 10 years to save, while just 6 per cent are able to save in less than 12 months.

Meanwhile, 75 per cent of first home buyers paid or are planning to pay a deposit of less than 20 per cent.

Looking to get onto the property ladder? Compare Money's first home buyer guide might help >

The average first homebuyer deposit has reached a record $120,000. Picture: iStock

Graham Cooke, head of consumer research at Finder, said many first time buyers can’t afford to pay such a substantial amount.

“The recent house price boom combined with the increased deposit requirement is making it tough for first home buyers to infiltrate the market,” he explained.

“Saving up to buy your first home has become a decade-long exercise for some people.

“Getting on the property ladder is becoming out of reach for many with affordability deteriorating.”

Mr Cooke urged would-be home buyers to supercharge their savings.

“Look for ways to stretch your dollar even further,” he advised.

“Ongoing savings rates have improved to as high as 2.00 per cent p.a. and term deposits are as high as 3.75 per cent if you are willing to lock up your money for 24 months.

“Also remember that, depending on your state, you will want to calculate your stamp duty also. This usually has to be paid for outside of your home loan.”

The research comes as NSW announced a major change to help people get a foot in the door, with first home buyers now having the option of choosing to pay an annual property tax instead of stamp duty.

The First Home Buyer Choice is part of a multibillion-dollar housing package announced in Tuesday’s state budget, with $728.6 million allocated for first home buyers over the next four years.

Premier Dominic Perrottet said the reforms will remove one of the largest upfront costs of buying a home.

“We want to lower the barriers to owning a home for first home buyers seeking a place of their own,” he said.

“In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent. Lifting home ownership is part of this government’s efforts and ambition to help families who are feeling the squeeze.”

NSW Premier Dominic Perrottet said he wanted to “help families who are feeling the squeeze”. Picture: NCA Newswire/Gaye Gerard

Meanwhile, Federal Treasurer Jim Chalmers has warned inflation is Australia’s “defining challenge” after Reserve Bank governor Philip Lowe predicted it will hit 7 per cent this year.

In a speech to the American Chamber of Commerce in Australia on Tuesday morning, the RBA boss said the board had expected an inflation peak of 6 per cent in 2022, but that the forecast had been pushed even higher since early May, when petrol prices began to skyrocket.

Now, the RBA is bracing for a peak of 7 per cent in the December quarter – up from the current rate of 5.1 per cent.

And while he said he expected it to decline by early next year, it would take a “couple of years” before inflation returned to normal, meaning there’s a lot of pain ahead for Aussies battling the current cost of living crisis.

Dr Lowe also confirmed that more interest rate hikes were a certainty.

Tips for first home buyers

● Sell assets: Things like a car, bike, sporting goods, gaming consoles and designer clothing can fetch a decent price on second-hand markets.

● Find a guarantor: If your parents don’t want to part with cash, they could use their property as security to guarantee part of your deposit. This reduces the amount you have to save and might help you avoid lender’s mortgage insurance (LMI) costs too.

● Save using the First Home Super Saver Scheme: This scheme helps you save more towards your deposit, as any money saved is taxed at a lower rate, and earns a return in your super fund.

● Go on a spending diet: Commit to stop spending on takeaways, shopping, gifts or experiences for just one month and see how much you can save.