Artwork. Bidder at auction in Sydney. NSW real estate.
Home buyers are taking four times longer to scrape together deposits than their parents, with an alarming study revealing the upfront costs of a home have blown out following recent interest rate cuts.
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, with thousands more needed on top for other costs.
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.
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These charges have followed a 41 per cent rise in the price of Sydney homes since 2020 – part of which has been fuelled by greater buyer spending following three interest rate cuts this year.
Assumes all income is saved. Source: MCG.
MCG reported that the cash burden of buying has outstripped people’s ability to save, leading to a lengthy wait for new buyers to have enough funds to scale the property ladder.
The time needed for an average earner to save a deposit at current Sydney prices, even if allocating all their income into savings, averaged 121 weeks, up four times on the 29 weeks needed in 1975.
It also currently takes three times longer to save a deposit than in 1985 and twice as long as in 1995 – accounting for typical prices and incomes back then.
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Current wait times even dwarfed levels reported in 2015, a point at which affordability had already reached crisis levels, when 99 weeks of saving a full income was required.
First-home buyers Kiana Solakovski (25) and Kristian Radosavljevic (26) recently bought an apartment in Carlton after a long search. Picture: Richard Dobson
MCG’s report noted this was before “mortgage serviceability even enters the picture”.
MCG Quantity Surveyors director Mike Mortlock said 20 per cent deposits had ceased to be realistic for most buyers years ago but even 5 per cent was becoming a stretch for some purchasers.
“(Five per cent and stamp duty) can still be a lot of money and take an average earner years to save,” Mr Mortlock said. “It’s been made even harder by the high cost of living. 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.”
Excessive deposit requirements, combined with high property taxes, had exceeded most people’s ability to save, Mr Mortlock added.
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“Rising deposit requirements really show just how stark the difference has become in incomes and asset prices,” he said.
“Prices are just going up so 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.”
Government’s response to the growing deposit hurdle has been to increase the number of buyers eligible for the federal Home Guarantee scheme. It allows buyers to use 5 per cent deposits without paying the pricey lender’s insurance normally charged on transactions with low deposits.
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A home buyer in Dee Why would need close to $200,000 in upfront savings for stamp duty and a 10 per cent deposit, even if getting state first-home buyer support.
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The price cap for eligibility in Sydney is $900,000, which is set to rise to $1.5 million in 2026 – just below the city median price of a house ($1.56m).
Mortgage Choice broker James Algar said the scheme has been popular but has drawbacks. “It is complex and many people struggle to understand the requirements,” he said.
“There is also the risk of getting in a much higher amount of debt, which will mean a more expensive loan.
“Using the scheme also means you cannot at some point rent the home out. If you do, the loan will no longer qualify and you will have to pay insurance.
“That can be limiting for first-home buyers, who often need to rent their homes out for periods to afford them, or if they have a change in their (income).”
Source: MCG Quantity Surveyors.
Owl Home Loans director Aidan Hartley said it was rare for first-home buyers to have savings above $150,000, which would be necessary to get at least a 10 per cent deposit in most of the market.
Many first-time buyers were instead using deposits of 5 per cent or less, he said. “It’s easy to dismiss it as ‘it’s only 5 per cent’ but that can be $40,000 in some cases. Not many people have that.”
Kiana Solakovski recently bought a unit in Carlton in Sydney’s south with a 10 per cent deposit and said waiting to get 20 per cent would have meant getting priced out the market.
“By the time you save for a 20 per cent deposit at 2025 prices, years will have gone by and it will no longer be enough,” she said.
Source: MCG Quantity Surveyors.
Mr Algar said even first-home buyers using smaller deposits leaned heavily on parents for help. “The bank of mum and dad is huge. It’s the only way a significant amount of buyers get in,” he said.
“We also see a lot of couples in their 30s move back in with parents to save. They cannot save a deposit if they are still paying rent.”
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