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How long does it take first home buyers to save a deposit in each capital city?

How long does it take first home buyers to save a deposit in each capital city?

First home buyer couples in Sydney might have to wait 10.5 years to save for a house deposit, and 6.17 years for a unit deposit, according to data from Domain.

Domain have released the 2018 First Home Buyers Report, showing the lowest entry price and quickest path to purchase for first home buyers across Australia’s capital cities.

The findings painted a bleak picture for single first home buyers, with their time doubling to break into the property market.

2018 First Home Buyers Report found:

  • “Softer market conditions in most Australian capital cities have presented first home buyers a window to put into place a savings plan and overcome the deposit hurdle.
  • Access to the First Home Super Saver Scheme from July 1 will further support first home buyers to enter the market quicker, with the ability to access funds from personal contributions to put towards a deposit.
  • In Greater Sydney, the average time for first home buyers to save for an entry price property has been flat year-on-year – equating to 6.7 years for a house deposit and 5.8 years for a unit deposit.
  • In Greater Melbourne, price growth is now slowing and the average time to save a deposit for a house is 6 years and for units, it’s 4.2 years.
  • Greater Adelaide and Greater Perth come out on top: home to areas with some of the lowest entry prices and quickest paths to purchase for houses, nationally.
  • For units, Greater Adelaide, Greater Perth and Greater Hobart offer areas with the lowest entry point and the shortest time for first home buyers to save a deposit.” 

How is deposit time calculated?

Deposit saving time is calculated by comparing salary and entry-level price.

“With the average age to purchase a first home being 34, the report is based on the average income for couples between 25-34 years old in each capital city. ABS wage data is used to provide an estimate of current salary by factoring wage price growth using the ABS Wage Price Index (WPI).

The time required to save a deposit is based on a dual income, with each person saving 20 per cent of their post-tax income monthly that is deposited in a standard online savings account (interest earned is taxed at the individuals’ tax rate).”

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Source: Domain.com.au

Domain’s Data Scientist, Dr Nicola Powell, stated that for first time home buyers, “the property market can be daunting.”

“That’s why we’ve released Domain’s First Home Buyers Report. The report aims to make it easier for home hunters to determine the areas that offer the most promise based on locations that offer the quickest path to purchase, budget and proximity to the nearest CBD.

“While there are many factors to consider when making a purchase, the report shows there are options across every capital city,” said Dr Powell.

Greater Sydney

For the Greater Sydney area, Domain’s 2018 First Home Buyers Report found that for houses and units, Wyong on the Central Coast had the lowest entry price and time taken to save a 20 per cent deposit.

HOUSES

  • Lowest = Wyong – entry price of $483,000 and time taken to save a 20 per cent deposit of 4.7 years.
  • Highest = The Hills Shire – entry price of $1,100,00 and time taken to save a 20 per cent deposit of 10.5 years.

UNITS

  • Lowest = Wyong – entry price of $375,000 and time to save a 20 per cent deposit of 3.67 years.
  • Highest = Sutherland Shire – entry price of $643,000 and time taken to save a 20 per cent deposit of 6.17 years.

The report also noted that Greater Sydney has the longest path to purchase, indicative of the soaring housing prices in the area. Further, seven of the top 20 entry prices identified fall below $650,000, meaning they are eligible for transfer duty exemption.

Greater Melbourne

For the Greater Melbourne area, Domain’s 2018 First Home Buyers Report found that Melton had the lowest entry point and time taken to save a 20 per cent deposit for houses, and for units, Greater Dandenong was the lowest for both categories. 

HOUSES

  • Lowest = Melton – entry price of $424,000 and time to save a deposit of 4.33 years.
  • Highest = Moonee Valley – entry price of $815,000 and time to save a deposit of 8.33 years.

UNITS

  • Lowest = Greater Dandenong – entry price of $305,000 and time to save a deposit of 3.17 years.
  • Highest = Yarra Ranges – entry price of $455,000 and time to save a deposit of 4.67years.

The report also noted that Greater Melbourne had experienced the biggest jump in the time taken to save for a house, an impact of the influx of first home buyers increasing demand. Despite this influx, Melbourne figures still remained below that of Sydney.

Greater Brisbane

For the Greater Brisbane area, Domain’s 2018 First Home Buyers Report found that Ipswich  came out on top for lowest entry point and time taken to save a 20 per cent deposit for houses. For units, the Brisbane area of Logan topped the list.

HOUSES

  • Lowest = Ipswich – entry price of $327,000 and time to save a deposit of 3.33 years.
  • Highest = Brisbane – entry price of $537,500 and time to save a deposit of 5.42 years.

UNITS

  • Lowest = Logan – entry price of $229,000 and time to save a deposit of 2.33 years.
  • Highest = Redland – entry price of $385,000 and time to save a deposit of 3.92 years.

The report also noted that the number of first home buyers had increased in Queensland, likely thanks to the First Home Owner’s Grant. Further, in Greater Brisbane the time taken to save a 20 per cent deposit increased by one month from last year, with unit time falling by three months.

Greater Adelaide

For the Greater Adelaide area, Domain’s 2018 First Home Buyers Report found that Playford had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Salisbury had the lowest of each category.

HOUSES

  • Lowest = Playford – entry price of $215,000 and time to save a deposit of 2.25 years.
  • Highest = Adelaide Hills – entry price of $445,000 and time to save a deposit of 4.75 years.

UNITS

  • Lowest = Salisbury – entry price of $200,000 and time to save a deposit of 2.08 years.
  • Highest = Unley – entry price of $298,000 and time to save a deposit of 3.17 years.

The report also noted the entry price for house and units in Greater Adelaide are the lowest of any mainland city. Further, the road to home ownership has “become harder in South Australia, as low wages growth coupled with housing price increases, creates a difficult market to buy in”.

Greater Perth

For the Greater Perth area, Domain’s 2018 First Home Buyers Report found that Kwinana had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Mandurah had the lowest of each category.

HOUSES

  • Lowest = Kwinana – entry price of $268,000 and time to save a deposit of 2.42 years.
  • Highest = Bassendean – entry price of $385,000 and time to save a deposit of 3.50 years.

UNITS

  • Lowest = Mandurah – entry price of $215,000 and time to save a deposit of 1.92 years.
  • Highest = Vincent – entry price of $327,000 and time to save a deposit of 3.00 years.

The report also noted that Greater Perth is the second most accessible capital city for purchasing a home with a relatively low entry price and quick path to purchase. In fact, the state has the highest proportion of entry-level buyers of all the states and territories in Australia.

Greater Hobart

For the Greater Hobart area, Domain’s 2018 First Home Buyers Report found that Brighton had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Glenorchy had the lowest of each category.

HOUSES

  • Lowest = Brighton – entry price of $215,000 and time to save a deposit of 2.42 years.
  • Highest = Hobart – entry price of $570,000 and time to save a deposit of 6.33 years.

UNITS

  • Lowest = Glenorchy – entry price of $195,000 and time to save a deposit of 2.17 years.
  • Highest = Hobart – entry price of $195,000 and time to save a deposit of 3.92 years.

The report also noted that Greater Perth is one of the most accessible capital cities in Australia with the lowest entry price for houses – if you’re looking in the outskirts of the city. Buying a house in Hobart itself would take you 6.3 years to save for.

Canberra

For Canberra, Domain’s 2018 First Home Buyers Report found that Holt had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Curtin had the lowest of each category.

HOUSES

  • Lowest = Holt – entry price of $410,500 and time to save a deposit of 3.67 years.
  • Highest = Kambah – entry price of $475,000 and time to save a deposit of 4.25 years.

UNITS

  • Lowest = Curtin – entry price of $235,000 and time to save a deposit of 2.08 years.
  • Highest = Watson – entry price of $315,000 and time to save a deposit of 2.83 years.

The report also noted that Canberra was “designed as a satellite city with hubs across the territory”, so most of the affordable areas are located on the territory fringe.

Further, although the ACT government abolished stamp duty on new and established homes for first home buyers on an annual household income of $160,000 or less, it’s set to introduce a new policy next year. Domain’s Data Scientist, Dr Nicola Powell, argues that once these new initiatives are in place, an “influx of first home buyers” are expected.

Greater Darwin

For the Greater Darwin area, Domain’s 2018 First Home Buyers Report found that Berrimah had the lowest entry price and time taken to save a 20 per cent deposit for houses. For units, Nightcliff had the lowest of each category.

HOUSES

  • Lowest = Berrimah – entry price of $281,000 and time to save a deposit of 2.42 years.
  • Highest = Tiwi – entry price of $455,000 and time to save a deposit of 3.92 years.

UNITS

  • Lowest = Nightcliff – entry price of $200,000 and time to save a deposit of 1.75 years.
  • Highest = Larrakeyah – entry price of $440,000 and time to save a deposit of 3.75 years.

The report also noted that the time needed to save for a house or unit in Greater Darwin has fallen over the past year, becoming 11 months quicker to save for an entry price house deposit and nine months quicker to save for an entry price unit deposit.

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This article was reviewed by Property & Personal Finance Writer Nick Bendel before it was published as part of RateCity's Fact Check process.

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