The Bankwest First Time Buyer Report 2017 has revealed that first home buyers (FHBs) purchased almost 95,000 properties in the year leading up to August 2017.
FHBs purchased 94,135 homes, a 5.6 per cent increase from the previous year, representing 14.3 per cent of all homes purchased across the country within the same period.
However, Australian FHBs are now spending more time saving for deposits before purchasing a home, with the report revealing that, on average, FHB couples now spend 4.6 years saving for a 20 per cent house deposit (or $111,080 on a median priced home), up from 4.4 years spent saving on a deposit of $103,907 in 2016.
The report also found that, on average, FHB couples are spending 4.2 years saving for a unit, five months shorter than the time spent saving for a house.
Bankwest’s general manager of personal & small business banking, Donna Dalby, added that with the exception of Perth and Darwin, FHB couples in Australian major cities are on average spending two months longer saving for a home deposit.
“Perth and Darwin as cities buck the national trend, being the two places where the savings times for first-time buyers have dropped year-on-year,” the GM said.
The report showed that Perth’s house prices have dropped by 4.3 per cent, bringing down the deposit saving time to 3.9 years (for a deposit of $103,046).
Ms Dalby commented: “Likewise, WA as a whole is the most accessible mainland state for first-time buyers. Our report shows in WA it takes 3.6 years to save the necessary $94,651 deposit.
“Low interest rates and a 6.9 per cent increase in house prices with sluggish wage growth of only 2 per cent during the same period are making it increasingly difficult for first-time buyers to get a foot on the property ladder.”
Saving for a deposit in the Perth suburb of Peppermint Grove requires the longest period of time (21.2 years), the report found, while Dundas in southeastern Western Australia where a 20 per cent deposit can cost $16,346 needs the least amount of time (0.7 years).
The suburb of Mosman in NSW has shown a huge increase in house prices, with the average couple now needing to save for 20.4 years to save for a deposit, four years more than in 2016. This can be attributed to the 29.8 per cent appreciation of house prices in the area in the year to June 2017.
Ms Dalby concluded: “While lower interest rates are beneficial for those who already own their homes in the form of lower loan repayments and interest, they can also bring more buyers into the market and this can drive up house prices, making home ownership less affordable for first-time buyers.
“Everyone dreams of having their own house, but medium and high-density housing is on the increase across the country and can offer a noticeably quicker route to home ownership than aiming at a house purchase.”
[Related: Demand for new houses to fall: BIS]
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.