The lack of affordable houses is a common problem in Australia, especially for first-time buyers. As property prices are always increasing, how long does it take to save up for a deposit?
Based on a new analysis, people living in NSW save about 10 percent of a deposit in about 4.3 years, and 20 percent of the deposit in 8.3 years.
These numbers are relevant with one condition: if the prices don’t grow. Still, where is the problem? Is this because Aussie young buyers aren’t keen on saving, or is it merely because of the discrepancy between earnings and prices?
In lines with statistics released by the Australian Bureau of Statistics, the concept of the Great Australian Dream is rather bleak.
According ABS, the number of first-time home buyers, 14.1 percent, is much lower than it had been reported in previous years. More precisely, the proportion of first-time buyers is at the lowest it has been in more than a decade. This isn’t surprising at all, considering the high prices and the low wage growth.
Deposits increase with house prices
First-time buyers face an immense challenge: that of saving up enough for a house deposit. In this direction, we have made the table below, by collecting information from CoreLogic RP Data, from March-May 2016.
The income levels also depend on the state. Note that, even though individuals living in NSW may earn more, the property prices there are typically higher.
|Single income||Two incomes|
|Median House Price||Earnings (full-time adult)||Years to save 10% deposit||Years to save 20% deposit||Years to save 10% deposit||Years to save 20% deposit|
|Source: Australian Bureau of Statistics|
These numbers, however, don’t consider the option of rising house costs, which is, presumably, the most significant challenge that Aussie buyers face.
As you can see, in comparison with couples, single individuals will have to struggle for a longer time to put money aside for a deposit. In truth, buying with family or friends is a better alternative.
Nonetheless, according to experts, first-home buyers should embrace a more realistic perspective in regards to what they can and cannot afford. Still, truth be told, since the living prices are continually on the growth, it’s becoming harder and harder to save for a deposit.
Looking for creative solutions
But this generation of young buyers may turn to rentvesting, which means purchasing a house in a regional or outer area, and renting it, afterward, while living in the city.
Meanwhile, first-time buyers should look for efficient ways of budgeting. This way, perhaps, they might increase the amount they get to save up. Alternatively, they may take an extra shift or job, and enhance their earnings.
The bottom-line? Purchasing a house is not a piece of cake, considering today’s economic situation. Nonetheless, that doesn’t diminish, in any way, the need for homes. In this view, one can embrace a range of creative measures and saving practices, and accomplish this target. What do you think about the current situation in Australia? In which category do you fit?