"Are you ready to take on a mortgage? It is a huge responsibility to bear, and prospective buyers better come prepared." - Mitch Connolly, Senior Investment Analyst
If you’re feeling like buying your own property is out of reach, you’re not imagining things; the average Australian house deposit is now six figures, and could take more than a decade to scrape together.
Aussies now need $106,743 on average to secure a house deposit, with more than 1 in 10 needing more than 10 years to be able to afford a deposit, according to new Finder research released today.
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The six-figure sum has risen by 16 per cent, or $14,851, since January 2019.
Aussies living in the ACT have seen the highest spike in home deposit sizes, with the upfront sum rising by nearly a quarter (24 per cent) to $117,790.
NSW residents follow closely behind, at 23 per cent – but the average deposit in this state is higher, at $128,469.
The figures come amid concerns that first-home buyers are being increasingly priced out of the market as dwelling values record their fastest rise in 32 years over the month of March.
First home buyer activity saw a monthly decline of over 3 per cent during February.
Property experts have also said the national housing market’s current upswing is showing no signs of slowing down, which may make things more difficult for prospective buyers.
“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,” said Finder home loans expert Sarah Megginson.
Eligible first-time buyers can look to Government schemes such as the First Home Loan Deposit Scheme, which allows buyers to get a mortgage with a 5 per cent deposit.
It means Aussies looking to buy a property priced at $600,000 will only need to save $30,000.
“While this does increase the cost of the mortgage over its lifetime through interest, the gains you stand to make as the property increases in value over time could potentially outweigh the extra interest costs,” said Megginson.
However, first home buyers should weigh up the pros and cons before purchasing a home, she added.
Metropole Strategists CEO Michael Yardney told Yahoo Finance there were a number of things first-time buyers needed to consider before snapping up a property.
The first step is to get your finances pre-approved, he said.
“In today’s fast-moving markets, it’s important to make firm property offers with as few conditions as possible. Therefore having a finance pre-approved will put you in a much better position,” he said.
The second step is to take into account all the expenses that home-owners need to pay that renters don’t have to think about.
This includes stamp duty and conveyancing costs. All up, this can add 5 per cent to the property’s value, Yardney said. “Don’t forget the ongoing costs including insurance, rates, owners corporation fees, repairs and maintenance,” he added.
The third step is to be open to compromising; don’t set your bar too high, too early.
“Your first home won’t be your forever home. Don’t expect to live in the same type of property that took your parents 30 or 40 years to afford,” Yardney said.
“This may mean you need to live in an apartment rather than a house or a suburb adjoining your preferred suburb.”
Finally, don’t let the property craze make you feel fear of missing out (FOMO) and lead you to compromise on the wrong things.
“Some are compromising on their finances and overstretching their budgets which may lead to financial challenges later down the track. They haven’t left money aside for all the little expenses they’ve forgotten,” Yardney said.
“Others are cutting corners and not conducting building and pest inspections. Yet others are compromising on the standard of property or location just to get into the market.”
Property investment can be a daunting process. We can help you every step of the way.
Source: Yahoo! Finance
Yun, J. (2021, April 12). 6 figures: Here’s how much aussies need for a house deposit. Yahoo Finance – stock market live, quotes, business & finance news. https://au.finance.yahoo.com/news/australia-house-deposit-012310756.html