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First-home-buyers could get into home a year sooner: Here's why

First-home buyers are benefiting from higher interest rates and lower property prices. But is it enough?

A composite image of people waiting to inspect a property to represent first home buyers and a suburban Australian street.
First home buyers will be able to shave years off the time it takes to save for a deposit. (Source: Getty)

Saving for a home deposit is the biggest hurdle for first-home buyers looking to enter the market, but the time it would take has taken a dramatic turn.

Domain’s annual First Home Buyer report revealed the amount of time needed for Aussies to save for an average-priced home had fallen by up to 13 months.

“A time machine has been offered to first-home buyers across Australia, as falling property prices in certain cities, higher interest rates accrued on savings, and wage growth have aligned to reduce the time to save for an entry-priced property deposit,” Domain chief of research and economics Nicola Powell said.

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“Nationally, for a couple, it’s now become six months quicker for a first-home buyer to purchase an entry-priced house and two months quicker for an entry-priced unit since this time last year.”

Powell noted that, while rock-bottom interest rates benefitted mortgage holders, it also meant the time for a first-home buyer to save for a deposit was significantly higher.

“This narrative has flipped since the Reserve Bank of Australia embarked on one of the most aggressive rate-hiking cycles in history, escalating the cash rate to over a decade high. Now, in 2023, first-home buyers are facing less competition and softer prices, reshaping the affordability conversation,” Powell said.

How long would it take to save for a house?

Location

February 2023

April 2022 (pre-rate hikes)

Sydney

6y 8m

8y 1m

Melbourne

5y 7m

6y 6m

Brisbane

4y 0m

5y 2m

Adelaide

4y 9m

4y 10m

Perth

3y 7m

3y 9m

Hobart

5y 8m

6y 1m

Darwin

3y 6m

4y 5m

Canberra

6y 0m

7y 2m

Combined capitals

5y 3m

6y 2m

Combined regionals

3y 10m

3y 11m

Australia

4y 11m

5y 7m

Sydney continues to reign as the city with the longest time to save an entry-priced house deposit, at six years and eight months, followed by Canberra at six years. Despite this, these cities also saw the largest annual reduced time to save for an entry-priced deposit since last year, at 13 months shorter.

Darwin is the best city for first-home buyers looking for an entry-priced house, with the fastest savings time at three years and six months. Darwin also saw the quickest time to save five years ago, providing a more stable environment to both save a deposit and keep up with the property market at the same time.

How long would it take to save for a unit?

Location

February 2023

April 2022 (pre-rate hikes)

Sydney

4y 7m

5y 3m

Melbourne

3y 7m

4y 3m

Brisbane

3y 5m

3y 7m

Adelaide

3y 2m

3y 1m

Perth

2y 3m

2y 6m

Darwin

2y 6m

2y 9m

Canberra

3y 7m

3y 10m

Combined capitals

3y 9m

4y 1m

Combined regions

3y 1m

3y 3m

Australia

3y 7m

3y 10m

First-home buyers will find that the time to save for a deposit for an entry-priced unit is significantly shorter than for an entry-priced house.

Across the combined capitals, purchasing an entry-priced unit could result in getting onto the property ladder one year and six months earlier than saving for an entry-priced house. Location can also make a significant difference, with affordability usually improving the further the distance from the city.

“It helps if a first-home buyer is flexible on the type of property and location they want. A neighbouring suburb or a unit in your ideal area might offer much better value, Powell said.

“The decentralisation of our workforce has supercharged affordability for some, with remote working bringing increased flexibility and greater housing choice.

“In saying this, we know that not everyone is able to do this, with lower-income workers often needing to be close to their workplace as they are unable to work from home. When navigating the first-home buyer’s market, considering property type and location, or even becoming a rentvestor, can all be worthwhile.”

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