First-home buyers hoping to buy in New South Wales and Victoria need to save more than $2,500 a month to have a sufficient deposit by 2020, according to the Domain Group’s analysis of the latest data from the Australian Bureau of Statistics (ABS). 

Meanwhile, first-home buyers hoping to buy in the next decade (2027) need to put away more than $500 each month in order to save a 20% deposit. Even more savings would be needed to buy in one of the capital cities.

While the available data from the ABS is state-wide, median prices are more than twice as expensive in the cities, according to the Domain Group. 

In New South Wales, the average first-home buyer loan is $353,000. Assuming a 20% deposit, this means first-home buyers would need to accrue $88,250 for a home valued under $450,000. 

To buy in Queensland by 2020, first-home buyers would need to save $2,300 each month. This amount drops to $460-$470 each month to buy in 2027—assuming that prices don’t balloon. These estimates do not include stamp duty. 

In Victoria, Western Australia, Queensland, and the ACT, using this measure, a deposit would be in the $70,000 to $80,000 bracket. Hundreds would still have to be saved each month to buy in the next decade, as has been outlined in the table below:

How much first-home buyers have to save

Monthly savings needed to accrue deposit. (Savings are calculated as monthly deposits from June 2017.)

  NSW VIC QLD SA WA TAS NT ACT
By 2020 $2,847 $2,570 $2,300 $2,130 $2,519 $1,832 $2,561 $2,344
By 2025 $970 $876 $784 $726 $858 $624 $873 $798
By 2027 $569 $514 $460 $426 $504 $366 $512 $469

Source: ABS first-home buyers average loan size since Feb. 2017

Those putting aside their earnings each month to save for a deposit have never had it harder, said Daniel Cohen, co-founder of First Home Buyers Australia (FHBA). “For people who are only just starting to save a deposit, it is nearly impossible to save a deposit in Australia’s most expensive capital cities,” he said.

As a result of skyrocketing house prices on the eastern seaboard and the number first-home buyers dropping to record low levels, tackling housing affordability has become a federal budget issue. Among the proposals being considered by Canberra include the reintroduction of a type of First Home Savers Account (FHSA), which would see pre-tax income placed in superannuation-style accounts and lightly taxed.   

However, Cohen warned that any attempt to raise first-home buyer deposits without reducing the intensity of investor activity could lead to further upward pressure on house prices. 

The latest FHSAs haven’t been popular with first-home buyers, according to Angie Zigomanis, senior manager of residential property at BIS Shrapnel. 

“In many respects [FHSAs were] a good option but [younger Australians] don’t want to tie up their money for the foreseeable future,” he said. “No one really took it up and it’s hard to see why that would be different this time around.”
 

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