A growing number of first home buyers are breaking into the housing market but it takes couples almost five years on average to save their deposit, new research shows.
There were more than 94,000 first homes bought across Australia in the year to August, a 5.6 per cent increase on the same time last year and the highest number since June 2015, according to The Bankwest First Time Buyers Report released on Tuesday.
Bankwest calculated the time taken for first-time buyers to save a deposit by comparing house and unit prices with income levels of people aged between 25 and 34 for each local government area.
The quickest route to home ownership in NSW is via the rural town of Bogan, north west of Sydney, where it takes debutante buyers around 1.2 years to save around $29,600 for a house.
Nationally, it takes an average of 4.6 years for first home buyer couples to save the more than $111,000 needed for a 20 per cent deposit on a median priced house.
That is more than one year longer than it took five years ago.
In Penrith, in Sydney’s outer west, it takes first-time buyers an average of 5.82 years to save a house deposit, while in Cardinia in Melbourne’s outer southeast it takes on average 4.27 years.
Bankwest’s Donna Dalby said low interest rates, sluggish wages growth and soaring house prices are making it harder for first home buyers to get a foot on the property ladder.
“While lower interest rates are beneficial for those who already own their homes in the form of lower loan repayments and interest, they can also bring more buyers into the market and this can drive up house prices, making home ownership less affordable for first time buyers,” she said.
Perth and Darwin bucked the national trend, with savings times for first time buyers dropping over the year to June, 2017.
But Sydney first home buyer couples will need on average 8.2 years to save the $215,133 deposit required to purchase a median priced house, much longer than the capital city average of 4.9 years.
The number of first home buyers in NSW is shrinking, accounting for just 8.1 per cent of the total number of homes bought in the state over the year to Junem 2017, a touch down on the previous year and lowest proportion nationally.
Soaring house prices have pushed out the average deposit saving time the most for Victorian first home buyers, who take an average 5.4 years – an increase of 1.7 years since June 2012.
Bankwest used data from property analytics firm CoreLogic, the Australian Bureau of Statistics, the 2011 and 2016 Census and the Reserve Bank of Australia to compile the report.