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16 months to save a deposit: The most affordable area for home buyers

·2-min read
Aerial shot of Perth
Perth has been identified as the most affordable capital city for first home buyers. (Source: Getty)

Perth is the only capital city where it’s possible for a couple to save enough for a 10 per cent deposit and stamp duty in about two years.

First home buyers should otherwise look to the regions if they want to buy within the next few years, according to a new report from Canstar.

The report ranked 14 jurisdictions from most affordable to least affordable, based on two key metrics:

1. The time needed to save for a deposit and stamp duty

2. Mortgage repayments as a percentage of after-tax income on an entry-level-priced property

Regional Western Australia took the prize as the most affordable market based on these metrics.

It would take a dual-income couple just one year and four months to save for a 10 per cent deposit in WA’s regional areas, or two years and nine months for a single.

For a 20 per cent deposit, it would take a couple two years and eight months, and a single five years and seven months.

Regional South Australia was ranked second, with Perth coming in third.

canstar ranking for housing affordability
canstar ranking for housing affordability

Canstar’s editor-at-large, Effie Zahos, said saving for a deposit could be disheartening for first home buyers.

“Especially when they realise it may take them close to a decade to achieve their goal.”

That’s why the premise of the new report was that first home buyers could work their way up to their dream home.

“They buy at the affordable end of the market, partner up, and put down a 10 per cent deposit on an entry-level home with the view of working their way up from there,” Zahos said.

Critically, the report found first home buyers in most jurisdictions were well-placed to cope with rising interest rates.

“Our report found that in 10 of the 14 jurisdictions, income-to-loan repayment ratios

didn’t exceed 17 per cent for a dual-income couple with a 10 per cent deposit, meaning there’s still a cushion in your income to combat rising interest rates,” Zahos said.

Perhaps unsurprisingly, Sydney was deemed the least-affordable place for first home buyers.

It would take a couple close to a decade to save for a 20 per cent deposit in the nation’s biggest city.

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