First time buyers are being forced to save for more than four years in order to buy their first property, new research has revealed.
According to Bankwest’s Financial Indicator Series – the third annual 'First Time Buyer Deposit Report', it is taking aspiring buyers longer to get on the property ladder than ever before.
Five years ago, it took first time buyers an average of 3.8 years to save for a deposit.
Bankwest senior analyst Tim Crawford said the rising cost of living, tighter lending criteria and higher property prices were stopping first home buyers from entering the property market sooner.
“Last financial year there were 90,210 first home buyers across Australia which is 35 per cent lower than the previous year and represents a seven year low,” he said.
“The fact that first time buyers are taking longer to save a deposit, especially in capital cities, directly contributes to this drop in new buyers entering the property market.”
Based on a 20 per cent deposit for the median national house price ($437,500), first time buyers across Australia would need to save an average of $80,500, compared to $62,100 in mid-2006. Across capital cities, first time buyers have to save an average of $93,313, which is $24,613 more than five years ago.
First time buyers saving 20 per cent of their annual income in Sydney have to save for the longest period of time (5.7 years) followed by Melbourne (5.4 years), whilst those living in Brisbane, Adelaide and Hobart don’t have to save for quite as long.
In, Canberra and Darwin it would take a first time buyer 4.2 years to save a deposit.
“Over the past year, all capital cities have seen a modest improvement in the time it takes a first home buyer to purchase their first property,” Mr Crawford said.
“However despite this, over the past five years house prices have risen by 27 per cent compared with a 21 per cent increase in wages, which points to a deterioration in housing affordability.”
In capital cities, on average, it would take a first time buyer couple 4.5 years to save a deposit to purchase their first home whereas in regional areas it would take significantly less time at 2.7 years.
“This means that if first time buyers located in capital cities around Australia started saving now they would be in a position to purchase their first home in early 2016 whereas in regional areas this would be in autumn 2014.”