What to Know About Deposit Saving Duration for First Home Buyers in Australian Capital Cities
First Home Buyers Report
Data recently released by Domain indicated that couples who were buying homes for the first time in Sydney might need to save for 10.5 years before they can get sufficient funds for a house deposit, and save for 6.17 years before they can deposit for a unit. The 2018 First Home Buyers Report highlighted the lowest entry price and the easiest path for first home buyers who intend to purchase in any of Australia’s capital city. The report revealed that single first home buyers would take more time before they can break into the property market.
The report showed that the most capital cities in Australia had softer market conditions which gave first home buyers an opportunity to work on a savings plans and easily make deposits. The report highlighted that access to the First Home Super Saver Scheme beginning from the 1st of July would further provide support to first home buyers to enter the property market faster because they would be able to get funds from personal contributions which they can use as a deposit for house or unit.
The report showed that in Greater Sydney, the average period for which first home buyers saved for an entry price property took 6.7 years to make a house deposit and 5.8 years for making a unit deposit. In Greater Melbourne, the report stated that the price growth had been experiencing sluggish growth, and the average period for which to save for a deposit is put at six years and 4.2 years for a unit deposit. According to the report, Greater Adelaide and Greater Perth ranked on top when it came to areas with the national lowest entry prices and fastest paths to purchase houses. For unit deposits, it was reported that Greater Hobart, Greater Adelaide, and Greater Perth had the lowest entry points, as well as the shortest duration for first home buyers to save up for a deposit.
Calculation of Deposit time
The report stated that deposit saving time was calculated by making a comparison between salary and the entry-level price. The average age for being a first home buyer was recorded at 34 as the report took into account the average earnings of couples between 25-34 years old in the capital cities. The ABS wage data was used to get an estimate of the current salary by determining the wage-price growth using the ABS Wage Price Index.
It was recorded that the time needed to save a deposit was calculated based on dual sources of income with each person depositing 20% of their post-tax income in a standard online savings account.
Dr. Nicola Powell, the data scientist at Domain noted that most first time home buyers saw breaking into the property market as a huge challenge. She explained that the Domain’s first home buyer report was released to make it easier for prospective home buyers decide the areas that were the most promising based on their budgets, locations that had the quickest path to purchase, as well as the proximity to the closest CBD. Dr. Powell noted that while there were so many factors to be taken into consideration when one intends to make a purchase, the report highlighted the options that existed in the capital cities.
Report on Capital Cities
For the city of Greater Sydney, the report highlighted that Wyong on the central coast had the lowest entry price and time spent in saving a 20% deposit for both houses and units.
For the Greater Melbourne city, Melton was recorded to be with the lowest entry point and time spent in saving 20% deposit for units as well as houses. Greater Dandenong ranked lowest on both categories
In Greater Adelaide, Playford was recorded to be with the lowest entry price and time used in saving 20% deposit for houses. For units in the area, Salisbury ranked lowest in the two categories. For the city of Greater Perth, Kwinana was with the lowest entry price and time taken to save a 20% deposit for houses. For units deposit, Mandurah was the lowest in both categories.
In the area of Greater Hobart, Brighton recorded the lowest entry price and time used to save up 20% deposit for purchasing houses while Glenorchy was the lowest of both categories for units.
In Canberra, Hold was with the lowest entry price and time used to save up 20% deposit for houses and for units, Curtin recorded the lowest for both categories.
The Greater Darwin area had Berrimah to be with the lowest entry price and time used to save 20% deposit for houses. The city had Nightcliff as the lowest for units in both categories.
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