According to new research, prospective homeowners in Australia now need a six-figure deposit to purchase a property.
Financial comparison site Finder’s First Home Buyers Report 2021, which surveyed 1028 first home buyers, found 11 per cent of homebuyers now require more than a decade to save for a deposit.
The results follow ABS data from January 2021 that showed the average deposit needed to secure a mortgage has now reached $106,743 – an increase of 16 per cent (+$14,851) since January 2019.
The ACT has experienced the largest house deposit increase since 2019, with the upfront amount required swelling by 24 per cent to $117,790, followed by New South Wales where the amount had increased by 23 per cent to $128,469.
The report also found that the average first home buyer puts down 20 per cent of the purchase price as a deposit.
Finder’s home loans expert Sara Megginson said that saving for a house deposit was a big financial hurdle for first home buyers, with many prospective buyers being shut out of the market.
“Low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit,” Ms Megginson said.
Finder’s research also revealed that more than a third of respondents took between two and five years to save for their deposit, with a further 25 per cent saying it took them between five and 10 years.
Ms Megginson pointed out that government grants could help eligible buyers fast-track their homeownership aspirations, with the First Home Loan Deposit Scheme making it possible to seek out a mortgage with a 5 per cent deposit.
“This means that for a property worth $600,000, you’d only need to save $30,000, which is far more achievable than a six-figure sum, and can help younger buyers get into the market early,” she said.
“While this does increase the cost of the mortgage over its lifetime through interest, the gains you stand to make as the property increases in value over time could potentially outweigh the extra interest costs.
“It’s important first home buyers weigh up all of these pros and cons when considering a real estate purchase.”
