The average couple in Sydney will now take a whopping 8.4 years to save up a deposit for a median-priced home in their local area, according to Bankwest’s 2016 First Time Buyer Deposit Report. The figure is six months longer than the previous study in 2015, and nearly twice the national average. The median deposit to save for was also a massive $214,600, more than twice the typical amount nationwide.
Bankwest found that saving up a median 20% deposit is becoming increasingly difficult for most couples. The average first time buyers (FTBs) in Australia now take 4.4 years to accumulate the $103,600 required to make a deposit on a median priced home. This represents an increase of two months compared to 2015, as well as an increase of $3,900 on of the median deposit.
The Sydney metropolitan area was, unsurprisingly, the toughest market in the country. In the NSW capital’s inflated housing market, first-time buyers took a whopping 8.4 years on average to save for a deposit.
Melbourne housing was also difficult to afford, with an average of 6.2 years taken to save up a deposit of nearly $150,000. Australia’s other capital cities were thankfully more affordable, with first time buyers in these cities taking between 3.8 and 4.3 years on average to save up.
The trend of increasingly unaffordable houses is most prominently shown by the massive decrease in number of first time buyers. FTBs made up 28.8% – more than a quarter – of Australia’s housing market in 2009, but now represent just 13.4% in 2016.
“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,” stated Bankwest Executive General Manager of Retail, Andrew Whitechurch.
“We’ve seen extremely strong growth in property values in Sydney and Melbourne, while wages have grown by just 2.2 per cent nationally.”
— 9Finance (@9Finance) December 21, 2016
On a state-by-state basis, NSW housing is still by far the least affordable in the nation for FTBs with a 5.7 year average deposit wait. This is more than a year longer than the next worst time in Victoria of 4.7, which was close to the aforementioned national average of 4.4 years.
Almost all states grew less affordable in 2016 – the only exception was Western Australia, which saw a slight, one month decrease in deposit wait times for FTBs since 2015. WA’s affordability was also significantly better than the national average, taking 3.6 years to save for a median deposit.
The only state to better this was Tasmania, where first time buyers had only to wait 2.8 years until they could afford a deposit.
Despite year-on-year decreases in affordability, several states have seen a decrease in deposit wait times over the past five years. The more affordable markets of SA, WA, TAS and the NT all had lesser deposit wait times compared to 2011.
The report quantifies the worrying trend of young Australian home buyers being priced out of our capital cities – in all states, regional and rural areas offer by far the quickest pathway to a first home.