Properties are increasingly unaffordable for many Australians, with the average time to save for a deposit now more than five years.
According to a new study by financial comparison website RateCity, based on the national average income of $70,000, it would take single-income first home buyers five years and seven months to save for a home loan deposit.
For a dual income couple, with a maximum recommended mortgage capacity of $540,000, it would also take over five-and-a-half years to save a 10 per cent deposit of $60,000.
Michelle Hutchison, spokesperson for RateCity, said the study shows houses remain unaffordable for many Australians.
“Despite lower interest rates and fallen property values, buying a home is still a distant dream for many Australians and the reality is that some will never afford home ownership in the areas they want to live in.
“Saving for a deposit of 10 per cent is basically the bare minimum of what you need to buy a home, although many home loans offer less than a 10 per cent deposit. Borrowers need to factor in other expenses including upfront home loan fees which average $700, lenders mortgage insurance, and stamp duty which varies depending on which state you live in.
“So borrowers should consider saving an extra $10,000 to ensure they have enough money to cover expenses for their first home purchase,” said Ms Hutchison, who also recommends first home buyers should aim for a 20 per cent deposit to reduce the chance of negative equity if property values fall.
Borrowers will also avoid paying lenders mortgage insurance, she added.
The most recent Australian Bureau of Statistics (ABS), for May, revealed first home buyers made up 17.8 per cent of owner occupier finance commitments, up 1.0 per cent from April.