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Time taken to save a deposit hits record 11.4 years

Housing affordability has worsened, with the median time required to save a 20 per cent deposit blowing out to 11.4 years, according to a new ANZ CoreLogic report.

The rapid rise in house prices and rental costs has led to a deterioration in housing affordability, according to the latest ANZ CoreLogic Housing Affordability Report.

Given that the national CoreLogic Home Value Index increased 27.8 per cent from the end of September 2020 through to the end of March 2022 – and as the cost of living increases in Australia – the report sought to understand housing affordability across each of Australia’s housing markets in the March 2022 quarter.

The report has revealed that affordability has worsened for both home owners and renters, with new records being set over the period to March 2022 for both time to save a deposit and value-to-income ratios.

Time to save a Sydney deposit now 14.1 years


According to the research, the median measure of years taken to save a 20 per cent deposit has risen by 2.2 years since the COVID-19 pandemic took hold in Australia in March 2020, now sitting at 11.4 years nationally. This is a new record high and the fastest uplift in the metric over a two-year period on record.

The figure is based on median household income data from the ANU Centre for Social Research and Method (and forecast at $1,665 per week for the March 2022 quarter) and assumes a household can save 15 per cent of their gross annual household income. 

The report, spearheaded by CoreLogic head of Australian research Eliza Owen and ANZ’s senior economist Felicity Emmett, noted that the rapid uplift in time to save a deposit highlighted the speed at which home values have risen through the current upswing, in which annual growth rates have been at their highest since the 1980s.

“While the upswing in rents and property values has generated increases in wealth and investment returns for many property owners, it has created greater affordability challenges for those who are renting, and those looking to purchase their first home…,” the researchers wrote. 

“Unsurprisingly, the region with the longest time required to save a deposit is Sydney, where the estimated time to save is now at a record high of 14.1 years.

“The greatest increase in the time needed to save a 20 per cent deposit in the past two years across the capital cities was in Hobart, where the time required to save a deposit increased from seven years at March 2020, to 9.7 years by March 2022.

Dwelling values now 8.5 times income

As well as revealing a new record in terms of time to saving a deposit, the ANZ CoreLogic Housing Affordability Report also noted that the ratio of housing values to household income reached a new high in March 2022, rising to a record 8.5 times the median annual household income level nationally.

Indeed, the researchers found that the value-to-income ratio had been rising substantially since the COVID-19-induced property boom started, noting that the ratio was sitting at 6.8 in March 2020.

The ratio was largest in capital cities (at 8.4 across the combined capitals), with the regional income ratio at 6.0.

However, the increase in the dwelling value-to-income ratio was largest across regional Australia, where property prices have risen substantially more than incomes.

“Between March 2020 and March 2022, the value to household income ratio across combined regional Australia increased from 5.9 to 7.9, faster than the increase in the combined capital cities,” the report read.

Median weekly income estimates for March 2022 suggested capital city incomes are around 32.6 per cent higher than incomes in regional Australia, the report found, noting that “the comparative capacity to pay and compete for housing on median city earnings is significant”.

“Increased competition for regional housing from relatively high income earners in capital cities is likely to be a contributing factor to rising housing costs in the regions,” the researchers noted.

Those looking to rent are also facing pressures, the report found, highlighting that – at the national level, the portion of household income required to service rent on a new lease increased to 30.6 per cent, up from 28.5 per cent in the March quarter of 2020.

Again, rental affordability has deteriorated more sharply in the regions relative to the combined capital cities, with the portion of household income required to service rents at March 2022 hitting a record high of 34.0 per cent in regional Australia (compared to 28 per cent of income required to service capital city rents).

Speaking of the findings, the general manager of home loans at ANZ, John Campbell, told Mortgage Business that he was particularly interested in the time to save for a deposit, “because a lot of what we do in the retail business is to help people move from becoming a transactor to a saver… So understanding how long that journey, or that customer path, is for customers to get to the point where they can actually afford a home is really interesting for us to know what can we do to help to make sure that the nudges – and all the things that we build into our proposition – help customers to get to that position where they have saved sufficiently”.

“It really helps us get a feel for what the market is doing and what customers have to go through as they make their journey to homeownership,” he said.

The GM of home loans added that having a clearer picture of how the rental market was faring in regard to affordability also helped inform the major bank’s assessment processes.

Mr Campbell explained: “In particular, we’re looking at what the rental market means for customers in terms of where they [are] spending their disposable income, because that is one of the things that we clearly look at when you assess a home loan…

“So understanding what’s happening to [customers’] finances, particular through rent, [informs] how do we think about that when we go through the assessment process. And, of course, we build that into some of our risk analytics and metrics as well to understand how different regions are performing and where [we] would want more or less exposure and we help the [loan] book and which areas should we pay more closer attention to so.

“The report gives us really rich data as to whats happening in both regional, national, city and national.”

Time taken to save a deposit hits record 11.4 years

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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