Home seekers are making huge sacrifices as deposit requirements rise.
Sydney home seekers have been going to extremes to pull together deposits amid revelations $100,000 in savings is no longer enough for even a 10 per cent down-payment on a unit in much of the city.
It has come as agents report a sense of buyer urgency has returned to the market ahead of an expected rate cut later this year or early next.
A recent Home Buyer Sentiment Report indicated 63 per cent of home hunters believed it was a good time to be purchasing.
But the report also revealed home buyers were making considerable sacrifices to conquer the deposit hurdle, with one in five reducing their spending on essential health services to save faster.
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Home seekers with $100,000 in savings still won’t be able to pull together a 20 per cent deposit on a house in most of Sydney.
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A third also reported taking on overtime work to save faster, while about a quarter were getting second jobs. About half were cutting down on takeaway food and coffee.
Many of the respondents said rises in the cost of living had made these moves necessary.
The sacrifices may not be enough. Exclusive PropTrack data showed pulling together a 20 per cent deposit on a unit required more than $100,000 in savings in all but 19 Sydney suburbs.
A 20 per cent deposit on a house priced at the suburb median required at least $150,000 in 97 per cent of Sydney areas. A buyer would need to pay stamp duty on top of that.
Lender Mortgage Insurance provider Helia revealed the average time it takes to save a 20 per cent deposit in Sydney has now stretched to 14 years.
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Those willing to stump up only 10 per cent for a house still needed at least $100,000 in nearly 77 per cent of the suburbs across Sydney.
Home seekers with less than $100,000 in savings would not be able to afford a 10 per cent deposit on a unit in about a third of Sydney, the data showed.
Helia chief commercial officer Greg McAweeney said some home seekers may find a 5 per cent deposit necessary. This would incur a lenders’ mortgage insurance (LMI) charge.
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The average NSW buyer takes 14 years to save a deposit – and then they often have to face stiff competition at auction. Picture: Tim Hunter.
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“LMI offers a pathway for more home buyers to purchase their home sooner and avoid being outpaced by the rising property market”,” Mr McAweeney said.
“The equity gained from buying early often outweighs the cost of the LMI fee over time”.
Helia revealed another increasingly popular option for clearing the deposit hurdle was the bank of mum and dad.
Nearly two thirds of first-home buyers polled by Helia revealed they were getting some form of financial support from family in 2024, up from 42 per cent in 2023.
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