Australian property: give up smashed avocados and save a house deposit in just 51 years

OPINION: Would you give up smashed avocado to save for a deposit? You’ll have to wait a lifetime if you do, so it might be smarter to give up food altogether.

The smashed avo debate rolls on. Source: Jenifer Jagielski

Five years ago, the barrier to home ownership for young Aussies was neatly summed up by two words: ‘smashed avocado’.

A Bernard Salt piece for The Australian lamented the spending frivolity of our youth, who were at “hipster cafes” ordering “smashed avocado with crumbled feta on five-grain toasted bread for $22 a pop”.

“Shouldn’t they be economising by eating at home?” he asked. “Twenty-two dollars several times a week could go towards a deposit on a house”.

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Now, it makes sense to cut silly spending when saving for a life goal. Let’s see how the advice stacks up today.

Big auction crowds are pushing prices up in many cities. Picture: Tim Hunter.

REA data has Sydney’s median house price at $1.1 million, meaning a 20 per cent deposit would require $220,000 in savings.

Meanwhile Melbourne’s median house price of $810,000 requires $162,000 for a 20 per cent deposit; Brisbane’s median of $582,000 needs a $116,400 deposit and Adelaide’s $523,000 requires savings of $104,600.

First option: smashing your avocados at home. A Bunnings hammer can cost as little as $4.99. Then get a loaf of grain bread from the supermarket for $5, some feta for $3, three avocados for $4 and you can smash away for $12 a week; $54 less than three café versions. Giving up a daily $4 takeaway coffee adds another $28 to your savings and you’re $82 better off a week.

Saving $82 a week will get you a Sydney house deposit in 2682 weeks. That’s just 51 years! In Melbourne, it will take 38 years, Brisbane 27 years and Adelaide 25 years.

Not soon enough? Next option: giving up breakfast altogether.

A year’s worth of $22 breakfasts is $8000. Add lattes, and you’ve saved $9500. Only 22 more years for a Sydney deposit, 17 more for Melbourne, 11 more for Brisbane and an even decade to go in Adelaide.

Still no good? Time to bring out the big guns. By giving up three meals a day, living only on oxygen, tap water and the desire to own a home, you could save $66 a day. Sure it might be hard come dinner time, but having given up coffee, you should be able to go right to sleep and worry about your hunger in the morning, knowing that at your current rate of saving, you’ll put aside $25,000 for the year. Go without food until 2030 and there’s your Sydney deposit. In Melbourne you could eat in 2028 and in Brisbane 2026. In Adelaide, you’ll hardly even have time to feel hunger pangs before picking up a knife and fork in 2025.

I’m being facetious, but it’s extremely difficult to save a home deposit from scratch. Today and in 2016, when smashed avocados began trending.

The market hasn’t slowed down during lockdown. (Pictures by Julian Andrews).

Boomers may roll their eyes about frivolous spending, but their argument would be more relevant if young people were dining out while complaining about not being able to service an existing mortgage. Because it’s cheaper to make repayments today than it was 30 years ago.

If you were paying off a $100,000 loan with an interest rate of 18 per cent in 1990, you’d be paying $18,000 a year in interest; around two-thirds the average salary.

Today, an $880,000 loan at 2 per cent costs $17,600 a year in interest; less than one fifth the average wage.

Giving up breakfast would still take 11 years to afford a deposit in Brisbane. Picture: NCA NewsWire / John Gass

The pain is in getting together a $220,000 deposit, plus another $50,000 odd in stamp duty and other upfront fees; especially with banks offering 1 per cent interest on savings accounts. The biggest barrier to property ownership is entering the market.

Compare this to raising $23,000 upfront in 1990, with a 15 per cent return on savings. Getting in was the easy part; the pressure really came when repayments began.

Each generation has done it tough in their own way. Back then, giving up the occasional flash meal might help you get a house deposit. Nowadays, it would take you a lifetime, which is why so many must dine out at the bank of mum and dad, where the eye-rolling manager begrudgingly approves their loans.

Originally published as Australian property: give up smashed avocados and save a house deposit in just 51 years