RateCity.com.au
powering smart financial decisions
RateCity.com.au

Sydney and Hobart are Australia’s least affordable cities for first home buyers

Sydney and Hobart are Australia’s least affordable cities for first home buyers

A new report has confirmed what many of us suspected - soaring property prices have made a significant impact on housing affordability for Australia’s first home buyers, especially in the capital cities.

According to the State of the Nation's Housing 2021-22 report from the National Housing Finance and Investment Corporation (NHFIC), Sydney and Hobart are Australia’s least affordable cities for first home buyers, with less than 10% of properties being affordable to the bottom 60% of income earners in those markets.  

Average first home buyer debt was found to be $460,000 – up by $50,000 since the same time last year, and three times what was seen in the early 2000s. That said, the decline in mortgage lending rates in recent years has reportedly helped mortgage serviceability.

Despite a rise in median incomes over the past year, it was found that it would take an extra year on average for first home buyers to save a 20% deposit – that’s 8 years of saving. This is double the length of time it would have taken to save a deposit in the early 1990s, with the size of the deposit increasing fivefold over this time to almost $130,000.

The report also found that house prices increased by 21% over the year to December 2021 in the capital cities, and by 26% in regional areas. This can be partially attributed to more people working from home and migrating to larger houses in regional areas (especially in NSW and Victoria) due to COVID.

With net overseas migration (NOM) expected to return to pre-pandemic levels by 2024-25, demand for housing may start to exceed the available supply. With new housing taking up to 6 years to be built due to lack of available development sites and higher building costs, shorter housing supply could potentially lead to higher house prices and rents.

While being a first home buyer is challenging, there are options available to help make taking your first step on the property ladder that little bit easier. Depending on your situation, these may include:

Compare home loan options for first home buyers

Company
Product

Variable Rate Home Loan – Refinance Only

Real Time Rating™

3.93

/ 5
Interest Rate

2.64

% p.a

Variable

Comparison Rate*

2.56

% p.a

Repayment

$1,367

monthly

Real Time Rating™

3.93

/ 5
Go to site

special

Receive an extra 0.01% p.a. discount every year, up to a maximum discount of 0.30% p.a.
Company
Product

Variable Rate Investment Loan – Refinance Only

Real Time Rating™

3.36

/ 5
Interest Rate

2.94

% p.a

Variable

Comparison Rate*

2.86

% p.a

Repayment

$1,413

monthly

Real Time Rating™

3.36

/ 5
Go to site

special

Receive an extra 0.01% p.a. discount every year, up to a maximum discount of 0.30% p.a.
Company
Product

Variable Home Loan

Real Time Rating™

4.07

/ 5
Interest Rate

2.59

% p.a

Variable

Comparison Rate*

2.49

% p.a

Repayment

$1,359

monthly

Real Time Rating™

4.07

/ 5
Go to site

special

Receive $5,000 AUD cashback when you refinance your existing home loan ~ Ends in 28 days
Company
Product

Ocean Owner Occupied Variable (No Annual Fee)

Real Time Rating™

4.16

/ 5

Winner of Best Refinance Home Loan, RateCity Gold Awards 2022

Interest Rate

2.69

% p.a

Variable

Comparison Rate*

2.76

% p.a

Repayment

$1,375

monthly

Real Time Rating™

4.16

/ 5
Go to site

Winner of Best Refinance Home Loan, RateCity Gold Awards 2022

Did you find this helpful? Why not share this news?

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

Advertisement

RateCity

Related news