First home buyer confidence is returning

Following several years of nervousness, it appears the confidence of Australian first home buyers is finally improving.

Thanks largely to the COVID pandemic, buying conditions have improved significantly in recent months with many first home buyers looking to take advantage of low interest rates, an extension of the Federal Government’s first home loan deposit scheme and other state-based incentives.

It has been a number of years since it has proved so cheap to borrow money and evidently it is first home buyers who have the most to gain.

Australian Bureau of Statistics figures show that in July, home loans were at their highest level on record – rising 8.9% on the previous month.

First home buyers were a driving force behind the bounce, making up around one-in-three of all owner-occupier buyers across Australia.

Now, new data released by property group Domain has revealed just how long on average it takes new homeowners to work up enough of a 20% deposit to buy in each capital city.

For the most part the news is good with the figures showing improved housing affordability means that saving for a unit in Perth, Brisbane and Darwin has actually become easier, with it taking one to two months less than the same time last year to cobble together a deposit.

It probably comes as no surprise to anyone that Sydney first home buyers face the toughest road towards gathering enough funds to pay a home deposit.

With the entry level unit apartment price sitting at around $585,000 in the New South Wales capital, the data shows it will take one year, four months for a couple aged 25 to 34 to save a five per cent deposit.

To save a 20 per cent deposit, that figure blows out to five years, seven months.

In Melbourne, the entry level apartment price is slightly cheaper and sits around $424,500. What this means is that it will take four years three months for that same couple to save a 20 per cent deposit, and one year to save a five per cent deposit.

In Brisbane, where the average entry level apartment price is $328,000, it will take three years, three months to save a 20 per cent deposit and just nine months to save a five per cent deposit.

Those who are just concerned with getting a foot on the property ladder, but not overly concerned about which state their property is in, could do worse than look to invest in Adelaide. This is because the average apartment price in the South Australian capital is $285,000 – less than half of the average level entry unit in Sydney.

This means, in Adelaide it would take just three years for that couple to save a 20 per cent deposit and just nine months for them to save a five per cent deposit.

The fastest capital city in Australia in which to get together a deposit is in Darwin, where it takes one year, eight months to save a 20 per cent deposit (on a entry level price point of $200,000). The Domain figures show it would take just five months to save a five per cent deposit.

It is unlikely to come as a shock to any new home buyer to discover that the data also shows that most first home buyers in 2020 are looking at much higher prices than they were in years gone by.

In Sydney, apartment buyers can expect to pay 1.5 per cent more than they would have in 2015, while Melbourne buyers face a 2 per cent hike in prices from five years ago.


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