Forget the stereotypes – new data from Westpac shows that Australia’s millennials are forsaking travel in favour of saving for their first home.
According to Westpac, the number of its first home buyer loans that settled in March and April 2018 was higher than at the same time in 2017 and 2016.
Making a savings commitment
Based on analysis of 3480 Westpac Life savings accounts, which are structured around goal-based saving, the most popular savings goal of 25 to 34 year olds customers is “Home and Property”.
On average, 70% of millennial customers’ total savings is earmarked for a future home – ten times more than for holidays and travel, which was the most popular savings goal across all other age groups.
The age group found to be saving the most toward holidays and travel turned out to be the over-55s.
While 18 to 24 years olds also had holidays and travel in their number one spot, they were also found to be starting to save for their first homes, with their average savings balance for home and property at 50% of the average for older millennials.
Westpac head of savings, Kathryn Carpenter, said that reaching the age of 25 appears to be a key tipping point when people to go from thinking about saving for a home, to seriously saving for one:
“Millennials are often depicted as a generation more focused on life experiences and living in the ‘now’. However, our research shows that many are in fact taking saving for a home deposit seriously and prioritising it above other goals including travel or lifestyle.”
How long do millennials need to save for their first homes?
Depending on their location, these Westpac customers may need to save for several years before they can afford their first home deposits, according to the recently-released Domain 2018 First Home Buyers Report.
According to the report, first home buyers in Sydney would need to save for an average of 6.7 years to afford a 20% deposit on a house, or 5.8% for a deposit on a unit. In Melbourne, it would take 6 years to save a house deposit, and 4.2 years for a unit deposit.
Nationally, the areas with some of the lowest entry prices and quickest paths to purchase houses could be found in Adelaide and Perth, while the areas with some of the lowest entry prices and quickest paths to purchase units could be found in Adelaide, Perth and Hobart.