Hopeful Aussie first-home buyers are slamming into a barrier that their Baby Boomer and Gen X parents never encountered following an explosion in the upfront costs needed to secure a property.
Alarming new analysis has revealed the sum of cash a typical buyer needed for stamp duty and a 20 per cent deposit – the amount still favoured by banks – is blowing up past record levels.
It’s translated to buyers needing well above $150,000 in savings to simply get a foot on the property ladder in most areas – a tough ask in the current climate of soaring living costs.
These excessive requirements have meant those wanting to crack the market are spending far longer than their parents did to save up enough money, according to the MCG Quantity Surveyors study.
Current buyers on average incomes were taking four times longer than those in the 1970s to save enough for a deposit on a typical house in most of the country, the data showed.
Fast forward to the 1990s and buyers back then took half as long as current buyers in many areas to save enough for a 20 per cent deposit, taking into account wages and prices at the time.
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Current buyers on average incomes were taking four times longer than those in the 1970s to save enough for a deposit on a typical house in most of the country. Picture: Sam Ruttyn
MCG noted differences in wait times for a deposit could be even higher than this as the data only examined the gap between incomes and prices and did not factor in the cost of living in each era.
INTERACTIVE: HOW MUCH IN SAVINGS YOU’D NEED IN EACH SUBURB
MCG director Mike Mortlock some aspiring first-home buyers may be struggling to simply save any of their money, let alone an amount large enough to stump up stamp duty and a deposit.
“It’s been made even harder by the high cost of living,” he said.
“Most people are spending their salaries to cover their living expenses. To start really building up their savings, they would need a big pay rise.”
MCG revealed difference in incomes and prices across cities meant there was a large disparity in the amount of time it took buyers to save a deposit and just how much money they needed as a proportion of their wages:
NEW SOUTH WALES
Deposit needed across NSW in each decade
The MCG Quantity Surveyors data revealed buying the average Sydney house now required savings of over $380,000 for a 20 per cent deposit and stamp duty.
Thousands more needed on top of this for other costs like conveyancer fees, insurance, registration fees and due diligence checks like building and pest inspections.
An average Sydney unit required about $205,000 in upfront savings for the stamp duty and a same size deposit, but these costs could be substantially higher in certain suburbs.
Mr Mortlock said 20 per cent deposits had ceased by realistic in Sydney years ago, but even 5 per cent deposits were a big ask for most buyers because of current prices and wages.
Even five per cent home deposits are a big ask for many Aussies. Photo Jeremy Piper
QUEENSLAND
Deposit needed across Qld over 1975-2025
Queenslanders now take four times longer to save a home deposit than Baby Boomers did.
Data showed a Brisbane household on a typical wage would need to save their entire earnings for 104 weeks in 2025 to get a 20 per cent on a median-priced home. This up from just 28 weeks in 1975.
With a current median of $940,000, a typical Brisbane house would require $188,000 for a 20 per cent deposit.
This compared to a median of $23,700 50 years ago, which would have required $4,740 for a 20 per cent deposit.
The deposit burden has risen almost 40 times, but average wages have grown only from $170 a week to $1,800 – a tenfold increase.
Mr Mortlock said Brisbane had recorded “one of the sharpest long-run deteriorations” in affordability among the capitals”.
Further MCG research using PropTrack figures showed home buyers in some parts of Brisbane and the Gold and Sunshine Coasts are forking out more than $100,000 in stamp duty alone.
VICTORIA
How upfront costs across Victoria suburbs compare
Melbourne first-home buyers are getting their foot on the property ladder with less than $30,000 saved up — less than you’d need to buy a cheap new car.
But the 20 per cent deposit preferred by most banks is now $172,000 for the city’s typical home, enough to wipe out years of a typical family’s income.
Melton is the city’s best bet for affordability-sensitive buyers, with the possibility that a $485,000 typical home could be purchased for as little as $29,000 including a deposit and transaction fees, if you are eligible for certain government schemes.
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It’s not easy to get home ready in Victoria either.
But for the typical $860,000 house that a growing number of Melbourne families would trade up to as a second home, MCG Quantity Surveyors director Mike Mortlock said they faced a “real hurdle” in the form of $172,000 for a 20 per cent deposit.
Mortgage brokers in the city’s most affordable pocket have revealed those willing to go west, and who are able to use the federal government’s First Home Guarantee, can get houses with lower deposits.
SOUTH AUSTRALIA
Even with $30,000 in savings, South Australians have enough to cover the 20 per cent deposit and all of the upfront costs on a house in 26 suburbs.
The cheapest is Elizabeth North, where you need just $21,880 in total upfront costs to buy a $510,000 house.
Grow those savings to $50,000, potentially through a dual income partnership – and you unlock an additional 202 Adelaide suburbs in which you can buy a home.
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