First home buyers locked out by high deposits
The proportion of first home buyers in the market has halved since 2009.
A new report by Bankwest has shown first home buyers have fallen to 13.4% of the home buying market, down from 28.8% in 2009. The bank’s First Time Buyers Deposit Report argued that first home buyers are being locked out of the market by the high cost of saving a deposit.
The report found that Australian couples would have to save for an average of 4.4 years to accumulate the $103,600 necessary for a 20% deposit on a median-priced home in Australia. The figure has risen from 4.2 years in 2015, with the amount needed for a deposit rising by $3,900 from $99,700.
Western Australia was the only state that saw a decrease in the amount of time needed to save a deposit, down to 3.5 years from 3.6 years in 2015.
“Low interest rates, sluggish wage growth, and rising house prices are making it increasingly difficult for first time buyers to get a foot on the property ladder in most capital cities in Australia. Australia’s median house value grew 3.9% to $518,0002 in the 12 months to June 2016, while variable-lending rates on owner occupier housing loans are notably lower than the 10-year average rate of 6.93%,” Bankwest executive general manager of retail Andrew Whitechurch said.
Whitechurch said historic-low interest rates had served as a double-edged sword.
“While lower interest rates are beneficial for those who already own their homes in the form of lower loan payments and interest, they can also bring more buyers into the market and this drives up house prices, making home ownership less affordable for first time buyers,” he said.
Sydney buyers faced the toughest task of any capital city resident, requiring 8.4 years to save for a deposit. Of the top 109 local government areas with the longest deposit saving times, eight were in Sydney. Perth’s Peppermint Grove was the local government area with the longest savings time, at 19.7 years.
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