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First home buyers locked out of market

4 January 2017

A national report has revealed that on average Sydney home buyers will have to save for more than eight years for a deposit to buy their first house.

This amounted to $214,600 needed for a 20% deposit, and was significantly longer than the 4.4-year average for a first time home buyer (FTB) across Australia, which itself is two months longer than in 2015.

The report from Bankwest added that there are half as many FTBs in the market (13.4%) as a proportion of total buyers in 2016 compared to 2009.

Bankwest Executive General Manager, Retail, Andrew Whitechurch said: “Low interest rates, sluggish wage growth, and rising house prices are making it increasingly difficult for first time buyers to get a foot on the property ladder in most capital cities in Australia. 

“Australia’s median house value grew 3.9% to $518,000 in the 12 months to June 2016, while variable-lending rates on owner occupier housing loans are notably lower than the 10-year average rate of 6.93%. 

“We’ve seen extremely strong growth in property values in Sydney and Melbourne, while wages have grown by just 2.2% cent nationally.” 

Longest savings wait in Australia

Of the top 10 local government areas (LGAs) nationally where it takes longest for FTBs to save a house deposit, eight are in Sydney.

The top two areas are Strathfield (17.9 years, $410,800) and Mosman (17.4 years, $613,000). 

Other key findings from the Bankwest Financial Indicator Series’ First Time Buyers Deposit Report 2016, include: 

  • The number of FTBs declined to 90,939 in the year to June 2016, down from 94,517 the previous 12 months
  • Three of the top 10 LGAs with the shortest saving times for FTBs to buy a house are in QLD and NSW respectively, two in SA, one in WA and one in Tasmania
  • Regional and rural LGAs offer the quickest pathway to a first home. Nationwide, three in 10 LGAs require the average FTB couple to save for more than four years for a deposit on a median priced house. Of these 141 LGAs, 111 (78.7 per cent) are located in the capital cities 
  • The market for units is more accessible for FTBs than the housing market. On average, it takes 3.5 years for FTB couples to save a 20 per cent deposit on a median priced unit in Australian capital cities, and 1.4 years less than it takes to save for a house in the capital cities
  • The top 10 longest unit saving times are all in NSW. Nationwide, Manly is the LGA where it takes longest for an FTB couple to save a unit deposit (8.3 years), followed by Burwood (7.5 years) and Sydney (7.1 years). 

For more information on the report, click here.