Northern suburb Gagebrook is Hobart’s most affordable suburb. Picture: Matt Thompson
Greater Hobart has 11 suburbs where a first-home buyer can secure a house with less than $70,000 in savings.
New research from MCG Quantity Surveyors shows the most affordable option is Gagebrook, where a FHB purchasing a typical $380,000 house would need to have $44,840 in the bank.
That would cover a 10 per cent deposit of $38,000 plus $6840 in lenders’ mortgage insurance.
Many lenders require a 20 per cent deposit to avoid LMI, although government-backed schemes such as the First Home Guarantee could allow a FHB to avoid the insurance.
For those with a $50,000 deposit, there are just two suburb options. For savers with 100,000 in the bank, over two-dozen areas open up.
After Gagebrook, the city’s next most affordable suburb was Bridgewater, where a young buyer needs $49,560 in savings to buy a median value house, followed by New Norfolk ($54,280), and Clarendon Vale and Risdon Vale ($54,870).
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Roberts Real Estate has No.57 Hobart Rd, New Norfolk on the market for $549,000-plus. Picture: realestate.com.au
No.26 Walker Cres, Bridgewater was sold for $460,000 by Harcourts Signature. Picture: Supplied
A compounding issue is a stock shortage in these areas.
There is not one house for sale in Gagebrook, only one listing in Clarendon Vale, and a home that is double Bridgewater’s median price.
Meanwhile, MCG analysis shows a 20 per cent deposit for Hobart’s average home is now worth 93 weeks of the typical family’s wage.
This figure has more than doubled compared to just 40 weeks in 1975. It’s also risen by 35 weeks in the past 10 years.
A deposit in 1975 was $5170, now it is $133,000.
Mike Mortlock.
MCG Quantity Surveyors director Mike Mortlock said high home prices relative to incomes meant 20 per cent deposits became unrealistic for many new buyers years ago.
The difference was that today, even saving up a much lower deposit was becoming a challenge at current prices, he said.
“Even putting together a 5 per cent deposit in some areas is getting difficult. It can still be a lot of money and take an average earner years to save,” Mr Mortlock said.
REIT president Russell Yaxley said saving for a deposit takes dedication and commitment.
He said it was the first big step for first-home buyers.
“Federal and state governments see this and are helping in a number of ways, from lower deposits, shared equity and stamp duty exemptions,” he said.
“Even with government assistance, it does require commitment and dedication to save and may take years.”
Real Estate Institute of Tasmania president Russell Yaxley.
If a house is too expensive, a unit could be a more affordable option, Mr Yaxley said.
“Units are an excellent opportunity, demand is rising for more efficient, lower-maintenance homes, and it’s a perfect entry point to the market,” he said.
Mr Mortlock noted that home prices are going up much faster than wages.
“And until we build more housing, we’re going to be talking about the same thing in a few years. Only the problem will be even worse,” he said.
No.34 Spinifex Rd, Risdon Vale is listed with Fall Real Estate at $489,000-plus. Picture: realestate.com.au
No.12 Plymouth Rd, Gagebrook was sold by Harcourts Signature for $357,000. Picture: Supplied
Mr Mortlock said first-home buyer incentives, such as the federal shared equity scheme and other state-based programs, were a good development “in theory” but in practice would likely exacerbate the deposit burden by lifting prices.
“First-home buyer schemes often increase prices by encouraging buyers to spend more. They do not address the root of the problem, which is that we are not building enough,” he said.
Research by comparison website Finder shows an increase in young homebuyers purchasing with help from family.
It found, this year, almost 17 per cent of FHB relied on financial help from their parents, up from 11 per cent in 2022.
Finder personal finance expert Sarah Megginson.
Personal finance expert, Sarah Megginson, described the “bank of mum and dad” as one of the biggest unofficial lenders in the country.
“For many young Australians, homeownership feels like a dream that won’t be realised, unless you’ve got parents who can tip in some financial help – sometimes up to six figures,” she said.
DEPOSIT CHANGE OVER TIME
Year, Hobart median, Deposit, Wages, Weeks required
1975 $25,850 $5170 $130 40
1985 $55,500 $11,100 $300 37
1995 $106,750 $21,350 $500 43
2005 $246,875 $49,375 $800 62
2015 $355,000 $71,000 $1234 58
2025 $665,000 $133,000 $1430 93
WHERE YOU CAN BUY A HOUSE WITH UNDER 70K IN THE BANK
Gagebrook $380,000 median, $44,840 upfront costs
Bridgewater $420,000 median, $49,560 upfront costs
New Norfolk $460,000 median, $54,280 upfront costs
Clarendon Vale $465,000 median, $54,870 upfront costs
Risdon Vale $465,000 median, $54,870 upfront costs
Chigwell $477,499 median, $56,343 upfront costs
Primrose Sands $480,000 median, $56,640 upfront costs
Warrane $551,000 median, $65,018 upfront costs
Claremont $553,500 median, $65,313 upfront costs
Glenorchy $565,000 median, $66,670 upfront costs
Berriedale $590,000 median, $69,620 upfront costs
Source: MCG Quantity Surveyors Home Deposit Multiples report
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