Melbourne deposit hell: Why singles can’t buy homes

18 hours ago 2

Melb deposit hell: Why singles can’t buy homes

Melbourne singles need more than 15 years to save a deposit for their first home, shock new analysis has revealed.

Finder data shows nurses, teachers and junior lawyers are among those locked out if they’re trying to buy alone, while tradies are leapfrogging them into the market thanks to early wages and job security.

The federal government’s expanded First Home Guarantee, which came into effect this week, now lets more buyers enter with a deposit as low as 5 per cent and avoid costly mortgage insurance.
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Salary caps have been scrapped and price limits raised to help more people break in.

But experts warn the scheme will fuel competition in Melbourne’s sub-$950,000 bracket, the entry level already under siege.

Finder head of consumer research Graham Cooke said the deposit had become the real killer.

“People think interest rates are the be-all and end-all, but the deposit is the problem,” Mr Cooke said.

“Prices are rising faster than wages and that bottom rung is just getting higher and higher.”

Finder’s Graham Cooke says the deposit hurdle is the “real killer” stopping singles from getting on the ladder.

Mr Cooke said it was shocking how long it now takes to climb onto the ladder.

“You have to have a pretty decent income to buy as a single earner,” he said.
“It’s scary how far out of reach the market has become.”

The Finder expert warned Melbourne’s white-collar workforce faced an extra threat.

“People starting their careers are right to be concerned about the impact of AI on employment,” he said.
“Entry-level positions are the most at risk, particularly in creative and white-collar fields.
“On the other hand, you can’t get AI to fix your toilet. Trades still pay well and offer more security.”

Mr Cooke added that saving alone may not be enough.

“Combining a high-interest savings account with exchange traded funds (ETFs) can accelerate the journey,” he said.
“Rentvesting is another option, rent where you want to live, and have a tenant help pay your mortgage somewhere else.”

Though rentvesting is not an option for buyers accessing the home guarantee scheme.

Whitefox’s Michael Fava says couples pool salaries for more firepower, leaving singles stuck on the sidelines.

Whitefox Stonnington sales director Michael Fava said the guarantee would “lift the threshold slightly” but add more pressure on cheaper listings.

“Buyers won’t need to wait as long to scrape together a bigger deposit, which means they can move sooner,” Mr Fava said.
“But it also adds pressure at the affordable end of the market.

“In many cases, mortgage repayments are actually less than what people are paying in rent, it’s not the ability to service the loan, it’s simply getting that cash deposit together.”

Singles are trading backyards for buzz, with Chapel St cafes, shops and nightlife trumping square footage. Picture: Grace Frost

Mr Fava said couples pooling incomes had the advantage.

“Two salaries give you more firepower,” Mr Fava said.
“Singles cap out closer to $600,000, the dream of the quarter-acre block is still there, but many are happy to trade the backyard for the buzz of being close to cafes, shops and entertainment.
“Chapel St, coffee culture, live sport, lifestyle trumps square footage.”

House mortgage loan buy sell price growth chart real estate investment money

The federal government’s expanded First Home Guarantee is tipped to fuel competition in Melbourne’s under-$950,000 bracket.

Mr Fava said today’s buyers were arriving more prepared than ever.

“Five or 10 years ago we had to do all the guiding,” he said.
“Now they walk in with pre-approvals, spreadsheets and a clear sense of budget.

“But even with more knowledge, the reality is still tough — singles are at a disadvantage, and two incomes will always give couples the edge.”

He urged buyers to focus on clarity.

“Get crystal clear on your non-negotiables. Once you know that list, you can be flexible on the rest,” Mr Fava said.
“Too many first-home buyers get overwhelmed because they’re trying to tick every single box — and that’s just not realistic.”

Ni Advocacy’s Kevin Ni says single buyers must compromise on size or push further out into the suburbs.

Ni Advocacy director Kevin Ni said single buyers could still purchase, but the compromises were brutal.

“If you’re close to the CBD, you’re realistically limited to an apartment or a small unit,” Mr Ni said.
“For house-and-land, you’ve got to push right out into the outer suburbs. That’s the trade-off – distance versus dwelling type.”

Mr Ni said many of his clients were leaning on parents to make it possible.

“A lot of young professionals want to stay in the suburbs they grew up in, he said.

Case Study Ten Year Home Prices - Caulfield

First-home buyers are arriving more prepared than ever, armed with spreadsheets, pre-approvals and clear budgets. Picture: Tony Gough

Affordable homes are under siege, with rising demand set to pile more pressure on new developments. Picture: Jake Nowakowski

“Parents want them close too. But in reality, many are priced out unless Mum and Dad chip in with the deposit,” Mr Ni said.

Buyers were more likely to compromise on the product than the postcode, he said.

“Many are squeezing into smaller apartments – shoebox living, if you like – just to stay close to the city and enjoy that lifestyle,” he said.

“Don’t chase unicorns. You can’t expect a home to tick 10 out of 10 boxes on a first-home budget.
“Be clear on your must-haves and your deal breakers. Success comes from compromise and the sooner you accept that, the sooner you’ll be holding the keys.”

Fastest to save — House (Melbourne)

Dentistry — 26 years

Computing & information systems — 26

Engineering — 26

Medicine — 27

Roof tiler — 29

Law & paralegal studies — 29

Business & management — 30

Rehabilitation — 30

Pharmacy — 30

Architecture & built environment — 30

Source: Finder, The figures were calculated by dividing a 20 per cent, Melbourne median house deposit by the annual savings capacity of each career, based on average incomes and a standard savings rate.