The average Aussie needs to save for four decades to afford a 10% mortgage deposit in Sydney, according to a new report from UBS.  

The report assumed the aspiring first-home buyer was earning $80,000 a year, was setting aside $4,000 annually, and was saving for a Sydney home valued at $1.2m that increased in price by 3% every year.

Nationwide, the typical first-home buyer, if they started saving this year, would need to save until 2028 to afford a 10% deposit on the average $400,000 home. This more than doubles to the year 2041 if the first-home buyer has to save a 20% deposit.

Meanwhile, if house prices were to continue to outpace wage growth, the average first-home buyer would probably never be able to save a 10% deposit unless they made a withdrawal “from the bank of mum and dad,” according to the authors of the UBS report.

“Our model suggests if these trends were repeated ahead — that is an ongoing increase in the house price-income and, therefore, the household debt-income ratio — a potential first-home buyer would likely never be able to save a 10 per cent deposit to buy a home,” the authors said.

UBS acknowledges that the current housing boom is on its last legs. Last month, it forecast that the Melbourne and Sydney property markets had reached their peak. For this exercise, UBS assumed that national price growth would slow to 5% a year, and to 3% in Sydney.

The report blames the challenge of saving a deposit for the declining share of first-home buyers in the residential property market. According to UBS’ data, first-home buyers account for a paltry 8% of total home loans. “We think a key reason for the decline in the FHB share of loans is that it takes an increasingly long time to save a deposit,” the authors said.

The Swiss bank also countered the argument that Australian homes are more affordable now compared with the days of high interest in the 1990s. UBS’ data shows that if the Reserve Bank were to lift rates by as little as one percentage point (from the current 1.5% to 2.5%), the unaffordability of repayments would be perilously close to the peak of three decades ago.