Home deposit woes – Sydney buyers would need to give up two lifetimes of coffee, says Finder report

The mind-blowing budget sacrifices homebuyers now need to make after two years of out-of-control price growth have been revealed.

The extent to which prospective homebuyers in Sydney would need to cut back on living expenses in order to save a home deposit has been laid bare after two years of growth.

A study by comparison group Finder shows a buyer saving the average deposit would need to give up daily takeaway coffee over two lifetimes in order for the cutback to make a difference.

This equated to more than a millennium’s worth of Netflix subscriptions.

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The analysis comes as one in three Australian mortgage holders struggled to make loan repayments last month ahead of the first official interest rate rise in almost 12 years – a figure that economists and money experts say will likely rise over the next two months.

Rising house prices are making it difficult for young buyers to crack the market.

The Finder study showed prospective buyers in Sydney would need to give up twice as much coffee or Netflix than those in Adelaide and Perth when it came to saving for a deposit.

In any case, the sheer number of takeaway coffees required in order to make the savings work showed just how out of reach homeownership had become for Australians following two years of surging home prices.

In order to save the average deposit size required for Sydney’s median property price of $1,116,889, a prospective buyer would need to give up 52,191 takeaway coffees, the analysis showed.

For those who purchased one coffee a day, this equated to 143 years.

It would take giving up daily barista made coffee over 143 years for a Sydney buyer to save a deposit. Picture: Jason Edwards

Those who couldn’t live without barista-made coffee would need to give up 1,694 years of Netflix, 13,961 bottles of wine, 11,169 meals out or 1,867 tanks of petrol.

Finder’s Consumer Sentiment Tracker for April found 28 per cent of Australian mortgage holders struggled to make loan repayments ahead of the RBA’s 0.25 per cent rate rise last week.

Finder senior editor of money Sarah Megginson said it was likely that mortgage stress would rise in May and June as lenders passed on interest rate hikes.

“The past two years have seen a record number of buyers enter the property market, but many haven’t budgeted for a rainy day,” she said.

First home buyers in Sydney must contend with a median property price of more than $1.1m. Picture: David Swift

Moody’s Investor Services pointed to a “moderate” increase in mortgage delinquency rates throughout the rest of the year due to “rising interest rates and slowing property prices.”

Moody’s Investor Services vice president Alena Chen said the prospect of further cash rate hikes would increase the risk of mortgage defaults.

“The Reserve Bank of Australia raised the cash rate to 0.35 per cent from 0.1 per cent on 3 May and flagged further increases. This will push up floating-rate mortgage interest rates, worsening borrowers’ capacity to repay debt and increase the risk of delinquencies and defaults,” she said.

“Interest rate rises will pose the most risk for mortgages with high balances and for those whose repayment amounts are close to borrowers’ maximum repayment capacity.”

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Originally published as Home deposit woes – Sydney buyers would need to give up two lifetimes of coffee, says Finder report