First home buyers worse off than a year ago despite COVID-19 downturn

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on September 24, 2020
First home buyers worse off than a year ago despite COVID-19 downturn

Photo by Anoof Junaid on Unsplash

New research from Domain reveals first home buyers are taking up to 6.5 years to save for a house deposit, up 2.6% from a year ago.

Those figures are from Domain's 'Home Buyers Report', and are for Sydney's 'entry-level' house prices and wage data on young people aged 25-34 years.

In Sydney, it now takes two months longer to save for a house deposit compared to a year ago.

For reference, Sydney's 'entry-level' house price is $680,000, while the median, according to earlier data from Domain was over $1,000,000.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 26, 2022. View disclaimer.

Elsewhere, time taken to save for a 20% deposit was more mixed, with Perth's time taken decreasing by one month compared to a year ago, down to three years and five months.

However, according to Domain's senior research analyst Dr Nicola Powell, affordability could improve in the next few months.

"Although the majority of capital cities saw the journey to homeownership become a little longer compared to the same time last year ... buying conditions have improved, first-home buyers appear to be taking advantage of retreating investor activity, reduced foreign buyer interest, the extension of the Federal Government’s first home loan deposit scheme and other state-based incentives," she said.

Overall the capital city that takes the shortest amount of time to save for a house is Darwin, taking just three years and one month - a one-month reduction compared to a year ago.

Its 'entry level' house price is $362,000.

For houses the breakdown across the capital cities is as follows:

City 'Entry-Level' House Price Time Taken to Save for a 20% Deposit Annual Change in Months
Sydney $680,000 6 years, 6 months +2
Melbourne $600,000 6 years +2
Brisbane $450,000 4 years, 6 months +1
Adelaide $375,000 3 years, 11 months 0
Perth $366,580 3 years, 5 months -1
Hobart $380,000 4 years, 2 months +3
Darwin $362,500 3 years, 1 month -1
Canberra $606,060 5 years, 5 months +4

Source: Domain

Over the past five years, however, things are a little different.

In Melbourne, it now takes 16 more months to save for a 20% deposit compared to five years ago - Hobart was second-highest at 15 more months.

Meanwhile, Darwin and Perth experienced slides of seven and six months respectively.

Unit prices a mixed bag

While house prices are generally higher compared to a year ago, unit prices are a mixed bag.

In Sydney, for example, the 'entry-level' unit price is $585,000.

It now takes first home buyers 5 years and 7 months to save up for a 20% deposit, which is one month longer than a year ago, but five months shorter than five years ago.

In Brisbane, the entry-level price is $328,000, taking 3 years and 3 months to save for a 20% deposit - down two months on a year ago, and seven months on five years ago.

In Darwin, that five-year figure is down 22 months, meaning it takes nearly two years less to save for a house deposit than it did in 2015.

The only city to record longer deposit-saving times for both time periods was Hobart, taking one month longer than a year ago, and a whole year longer than five years ago.

Dr Powell put Hobart's acceleration down to stagnant wages, a weak savings rate, yet a growing entry-level price growth for both houses and units.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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