First home buyers: how long it takes to save a deposit for a house or apartment in Australia

As house prices soar, Aussie first home buyers are facing years of putting together a deposit but with no guarantee of ever getting a property.

It would take first home buyers eight years and one month to save a deposit for a house in Sydney as skyrocketing property prices make it the toughest market to jump onto the property ladder.

In Melbourne, first home buyers would need six years and nine months to put together the money for a house based on a 20 per cent deposit, data from realestate.com.au has revealed.

It comes as property prices skyrocket across Australia, amid record low wage growth and savings impacted by low interest rate returns – a triple whammy for first home buyers.

Units take slightly less time to save for in Australia’s major cities, with six years of savings needed in Sydney, while Melbourne is almost five years, showed the data supplied exclusively to news.com.au.

Across Australia’s five capital cities, the average home values have already increased by 10 per cent between January and May, according to CoreLogic figures.

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Units are the cheaper option for first home buyers, but still will take years to save up a deposit to buy them. Picture: NCA NewsWire / Gaye Gerard

Want to save for a home deposit? Read about how much you might need on Compare Money >

Accessing the housing market is increasingly difficult for first home buyers, noted Paul Ryan, realestate.com.au economist.

“Since the onset of the Covid-19 pandemic, reduced mortgage interest rates have pushed housing prices higher. While this hasn’t necessarily increased repayment costs, it has dramatically increased the deposit required to enter the market for first home buyers,” he explained.

“In some areas of Australia, it could take many years for a couple aged 25 to 34 earning median salaries and saving 20 per cent of their take-home pay to save the required deposit to avoid paying lenders mortgage insurance.”

Along the east coast, Brisbane was the quickest capital to be able to save for a deposit, taking four years and six months for a house and three years and four months for an apartment.

Saving is only going to get harder

With interest rates set to remain low for several years, and many tipping continued property price growth, the amount of time required to save for a deposit for first home buyers is likely to increase, Mr Ryan warned.

“The steeper deposit burden will restrict many first home buyers entering the market and those that are in a position to purchase a home often rely on family help to make up the deposit shortfall, which perpetuates intergenerational inequity,” he said.

“The expansion of the federal government’s First Home Loan Deposit Scheme is a welcome policy to alleviate this deposit burden for first home buyers. However, the cap on the number of places – which are quickly snapped up – should be increased or removed to allow access to more first home buyers.”

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People are having to rely on family to boost their house deposits. Picture: iStock

The ACT has some of the longest saving times across the country, outside of Melbourne and Sydney, with six years and two months to get the money together for a house and three years and seven months for a unit.

The outlook is slightly better in Adelaide, with people needing to put in four years and three months of hard work to get the deposit together for a house and two years and nine months for an apartment.

Places to buy faster

For those first home buyers looking to settle in Australia’s major cities the news isn’t good, but a sea change could help them snap up a property sooner.

Rural South Australia and rural Western Australia are areas where first home buyers can save for a deposit fastest, said Mr Ryan.

It would take just two years and two months for a house in South Australia, while in WA a first home buyer can snap up a house in two years and nine months. In both states, it would take one year and nine months to get the money together for a unit.

“Looking at only capital cities, Darwin is where first home buyers can get into the market quickest,” he added.

A house in Darwin could be bought after three years and nine months of saving, while a unit would take two years and four months.

Outside of Sydney, those in NSW looking to buy a house would need four years and five months to save for a deposit and three years and five months for an apartment.

Auctions have been packed out as people look to get into the property market. Picture: Sunday Telegraph / Gaye Gerard

For the rest of Victoria, it would take just three years and nine months to snap up a house and two years and eight months to nab a unit.

In the Sunshine state, which has been popular among people fleeing Sydney and Melbourne amid the pandemic, a house in QLD will take three years and five months to save for a deposit and two years and nine months for a unit.

The realestate.com.au data was calculated based on a two person household saving 20 per cent of their post tax salaries.

It took into account the median income of 25 to 34-year-olds using state-level’s Wage Price Index and was based on dwelling prices from May 2021.

Pricing people out of wealth

Recent modelling from CoreLogic of incomes and prices revealed 99.9 per cent of Sydney houses were unaffordable for a quarter of city residents because of price increases outstripping wage growth for decades.

Houses in more than 1000 suburbs – including once affordable western enclaves like Liverpool, Camden and Blacktown – are out of reach for the bottom 25 per cent of income earners.

Most low income workers can’t afford to buy in Sydney. Picture: NCA NewsWire / Damian Shaw

Middle-income earners, those on the 50th percentile for wages and earning about $100,000 a year, can only afford about a quarter of Sydney’s houses, according to a study by property group CoreLogic.

Further research conducted by CoreLogic comparing national dwelling values and average incomes demonstrated that low income workers are only able to afford 17.6 per cent of available housing stock in Australia – or just 2.9 per cent in Sydney and 4.2 per cent in Melbourne.

Not only are low income earners restricted from freely choosing where they want to live, but are left out of accumulating wealth through homeownership, according to Effie Zahos, money expert and editor-at-large for financial comparison site Canstar.

“Property is basically the number one asset vehicle for most Aussies to actually build their wealth, and this is why we have a lot of gender discrepancy in wealth too,” she said.