Average first home buyer loan, deposit
The pandemic-induced downturn that gripped the nation for much of 2020 cut nearly half a year off the time needed to save for a deposit, according to figures published by the Australian Institute for Progress earlier this year.
The national figures showed an improvement due to the price falls in Australia’s two biggest cities during the quarter, even as the situation in individual cities varied.
Repayments and deposits fell in Sydney, Melbourne, and Hobart but rose in Brisbane, Adelaide, Darwin, Canberra, and Perth.
Finder spokeswoman Sarah Megginson said that saving for a house deposit is a big financial hurdle for first home buyers, with more than half of first home buyers—53 per cent—spending more than 30 per cent of their income in order to meet mortgage repayments.
“Prospective buyers are being stumped by a supercharged property market, which isn’t showing any signs of slowing down just yet,” Megginson said.
“Low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit.”
Record low interest rates—RBA governor Philip Lowe has said the benchmark cash rate would likely stay at 0.1 per cent for the next four years—are keeping repayments low.
Current interest rates have also pushed home values to new highs while making the return on any savings minimal.
The surging prices that last month pushed the housing market up 2.8 per cent, the fastest pace of appreciation in 32 years, have created several inflection points across the market with Sydney and Melbourne staging a full recovery from earlier downturns.
At the same time, data released by the REIA showed housing prices had soared by more than 500 per cent during the past 25 years, with the median price surging from $160,000 in 1996 to $825,000 in 2020.