Property group Domain’s latest First Home Buyer Report has revealed that aspiring home owners in Sydney, Melbourne, Hobart, Brisbane and Canberra are likely to spend more time saving for a 20 per cent deposit with affordability pressures mounting.
Sydney remains the least affordable capital city, where first home buyers (FHBs) require an average of six years and six months to purchase an entry-level house valued at $680,000, an additional two months on last year.
FHBs in Melbourne are expected to encounter similar challenges, with the Domain report revealing that Melburnians require an average of six years to secure a 20 per cent deposit for a house worth $600,000, also up two months on last year.
FHBS looking to enter Canberra’s property market have seen the sharpest deterioration in affordability over the past year, requiring an additional four months and a total of five years and five months to secure a deposit for an entry-level house worth $606,000.
Affordability pressures are less pronounced in Brisbane; however, FHBs still require an average of four years and six months to save for a deposit for a $450,000 house, up one month on last year.
Despite remaining one of the more affordable capital cities, FHBs in Hobart now require an average of four years and two months to secure a 20 per cent deposit for a $380,000 house, up three months on the previous year.
The hit to housing affordability across the aforementioned capitals has coincided with annual price increases, slightly offset by downward pressures experienced off the back of the COVID-19 crisis.
Canberra reported the sharpest annual house price growth (6.6 per cent), followed by Hobart (6.4 per cent), Melbourne (2.9 per cent), Sydney (2.6 per cent) and Brisbane (1.9 per cent).
However, some capitals recorded improvements in housing affordability over the past year, with FHBs in Darwin (three years and one month) and Perth (three years and five months) requiring one less month to save for a 20 per cent deposit to purchase a house worth an average of $362,000 and $366,580, respectively.
Conditions remained unchanged in Adelaide, where FHBs require an average of three years and 11 months to save for a deposit for a house valued at $375,000.
This coincided with house price declines of 2.6 per cent in Darwin over the past year, and 2.4 per cent in Perth, while remaining flat in Adelaide.
According to Domain’s senior research analyst, Dr Nicola Powell, affordability pressures are set to improve nationwide over the coming months as FHBs reap the benefits of state and federal government incentives, including the First Home Loan Deposit Scheme and the $688-million HomeBuilder scheme.
“Although the majority of capital cities saw the journey to home ownership become a little longer compared to the same time last year, in recent months weakening prices will eventually translate to improved affordability,” she said.
“Buying conditions have improved, first home buyers appear to be taking advantage of low interest rates, retreating investor activity, reduced foreign buyer interest, the extension of the federal government’s First Home Loan Deposit Scheme and other state-based incentives.”
The latest Lending Indicators data from the Australian Bureau of Statistics, revealed that the value of FHB loan approvals surged 10.6 per cent in July to $4.2 billion, contributing to a 10.7 per cent spike in owner-occupied approvals to $14.3 billion.
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.