New Home Buyer’s Deposit Delay
First home buyers could need up to 15 years to save for a deposit.
First home buyers could need up to 15 years to save for a deposit.
With property prices rising across the country, first home buyers could need as long as 15 years to save for a 20% deposit to afford a house in their preferred suburb according to mortgage brokerage firm True Savings.
The issue of saving for a deposit could be compounded by the Australian Prudential Regulation Authority’s lifting of the interest rate buffer to 3%.
Evidently, home buyers with average income and low savings would take the longest to save the required deposit, but that doesn’t mean that high-income earners are out of the woods.
For example, aspiring homeowners in Bondi Beach, in Sydney’s eastern suburbs, need almost 14 years to save a 20% deposit based on an annual income of $85,292 per year – the average income for a typical buyer in the area.
Out in Sydney’s west, home buyers in Horsely Park earning an average income of $72,033 a year would take 13.6 years.
The issue isn’t limited to Sydney with buyers needing to save for 10.5 years in Melbourne’s Southbank, 9.9 years in Prahran and 9.4% in Parkville.
First-home buyers in Hope Valley, Adelaide and Rosetta in Hobart need 15 years or more to save the deposit – the longest across the country.
True Savings took into account the average prices of houses in varying postcodes, the average savings of homebuyers as of September, their weekly income as well as the amount of disposable income they have each month.
“New home buyers are facing huge challenges right now; 15 years is a long time to be saving for a 20% deposit,” said Pete Steel, founder and chief executive of True Savings.
While APRA’s move will make it even tougher for buyers to break into the housing market according to Mr Steel.
“The higher buffer rate will reduce their borrowing capacity, so they need to save for longer to afford a higher amount,” he said.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
New research suggests spending 40 percent of household income on loan repayments is the new normal
Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.
Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.
“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.
CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.
Sydney
Sydney’s median house price is $1,414,229 and the median unit price is $839,344.
Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.
Melbourne
Melbourne’s median house price is $935,049 and the median apartment price is $612,906.
Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.
Brisbane
Brisbane’s median house price is $909,988 and the median unit price is $587,793.
Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.
Adelaide
Adelaide’s median house price is $785,971 and the median apartment price is $504,799.
Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.
Perth
Perth’s median house price is $735,276 and the median unit price is $495,360.
Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.
Hobart
Hobart’s median house price is $692,951 and the median apartment price is $522,258.
Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.
Darwin
Darwin’s median house price is $573,498 and the median unit price is $367,716.
Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.
Canberra
Canberra’s median house price is $964,136 and the median apartment price is $585,057.
Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts