First homebuyers need up to 18 years to save a deposit in some parts of Sydney
Paying off a mortgage in times past used to take most homebuyers about 20 years – today that’s close to how long some first-time buyers will need to simply save a deposit.
Analysis provided exclusively to the Sunday Telegraph showed first homebuyers in some city areas needed just over 18 years to save a 20 per cent deposit – more than double the eight years it took the average first homebuyer in Sydney as a whole.
The Finder.com.au modelling assumed the buyers paid current median prices, earned the average income of residents in their area and put away about a fifth of their earnings each month.
It comes as ABS and CoreLogic data showed property prices eclipsed growth in wages for all but one of the past five years, leaving aspiring buyers unable to catch up with the market.
This imbalance was the most extreme over the past year. Sydney house prices climbed by 29 per cent and unit values by 12 per cent, but wages grew by an average 2 per cent in the private sector.
Finder money editor Sarah Megginson said the result was first homebuyers facing a “mind boggling” slog to save a deposit.
Vinita Devapiriam, 29, recently bought her first home after a long time saving. Picture: Tim Hunter.
That deposit hurdle was the most pronounced in the Woollahra council area.
Those earning $161,000 a year, the average household income of residents in the affluent region, needed 18.3 years to save a deposit for a home priced at the area’s current median of $2.97 million.
And that’s not even including the stamp duty costs added on by the NSW government, which would require an additional $147,000 in upfront funds.
There was a similarly daunting deposit hurdle for first homebuyers in the Mosman area, who required 18.1 years of saving, while Waverley buyers needed 16 years.
Buyers in the Randwick, Strathfield and Willoughby areas needed about 14 years of saving.
My Housing Market economist Andrew Wilson said the mounting deposit hurdle showed only those with a “trade in” property could compete in much of the Sydney housing market. “If you don’t have that you’re going to struggle,” he said.
Saving for a deposit in the Woollahra area would take average income earners 18 years.
Mr Wilson added that someone facing the prospect of nearly 20 years of saving for a home would likely move somewhere cheaper to buy. Others would get their parents to help if they could, he said.
First homebuyer Vinita Devapiriam, 29, recently bought a unit in Concord and said she boosted her savings by staying with her parents, but it still took many years to stump up a deposit.
“I made a lot of changes to save. I skipped travel for years, and obviously during Covid. I stopped fine dining. I never took toll roads … it still felt like I’d never save enough,” she said.
Her broker Jane Vaughan of Mortgage Choice eventually helped her crack the market by recommending a loan product where she could use a 15 per cent deposit without paying lender’s mortgage insurance. “That made a massive difference,” Ms Devapiriam said.
