Home & Commercial Expert

Canberra first-home buyers need more than seven years to save for a house deposit: Domain report

First-home buyers in Canberra now need more than seven years to save a 20 per cent deposit, a new report shows, highlighting how unaffordable housing has become for property hunters hoping to get a foot in the door.

It takes seven years and one month to save for a 20 per cent deposit in the bush capital, according to Domain’s First-Home Buyer Report, released on Wednesday.

The report places Canberra as the city with the second-longest time to save, after Sydney, where it takes buyers eight years and one month. Over the past year, the time it takes to save a deposit increased by 18 months in both cities.

The time to save for a 20% deposit on an entry-house for a couple aged 25-34.
Area Time to Save Annual Change 5-year change
Sydney 8y 1m 18m 18m
Melbourne 6y 6m 6m 15m
Brisbane 4y 10m 3m 10m
Adelaide 4y 7m 7m 10m
Perth 3y 7m 1m -1m
Hobart 5y 10m 14m 31m
Darwin 4y 3m 9m 10m
Canberra 7y 1m 18m 31m
Combined capitals 5y 8m 11m 19m
Combined regionals 3y 10m 4m 7m
Australia 4y 5m 4m 6m

For units, the time it takes the save a deposit in Canberra was three years and nine months, up two months from last year.

The calculation is based on the earnings of a couple on average incomes for their respective city, between 25 to 35 years old, and who can save 20 per cent of their pay in a standard online savings account. This doesn’t take into account any transactional costs incurred in buying property.

The 20 per cent deposit is calculated on the entry-level price for property in each city, or the 25th percentile. In Canberra, that figure is $827,000 for a house and $437,500 for a unit.

Coming up with the deposit was always the biggest hurdle that first-home buyers faced, Domain chief of research and economics Nicola Powell said.

The time to save for a 20% deposit on an entry-unit for a couple aged 25-34.
Area Time to Save Annual Change 5-year change
Sydney 5y 6m 1m -5m
Melbourne 4y 4m -1m 3m
Brisbane 3y 5m 0m -2m
Adelaide 2y 11m 1m 2m
Perth 2y 6m 1m -4m
Darwin 2y 7m 6m -6m
Canberra 3y 9m 2m 5m
Combined capitals 3y 6m 3m 5m
Combined regional 3y 5m 7m
Australia 3y 9m 0m -1m

“Asking rents are at record highs across many cities, and with low vacancy rates, that will only translate into further rental price hikes, stalling savings goals,” Dr Powell said.

It is recommended that home owners dedicate less than 30 per cent of income towards mortgage repayments to avoid “mortgage stress”, with most capital cities and all regional areas currently below this threshold, apart from entry-level houses in Sydney and Canberra, the report found.

In Canberra, mortgage repayments on an entry-priced house as a percentage of income for a couple aged 25-34 was at 30.7 per cent. For a unit, it was 16.2 per cent.

The entry-level price for a house in Canberra is $827,000 and $437,500 for a unit. Photo: Megan Dingwall

This highlights how far house prices in the ACT has risen in the past year, Dr Powell added.

“Only a time machine can keep pace with this change,” she said.

“If you don’t have the bank of mum and dad and you don’t have an inheritance or lottery win, buyers will have to save for a lot longer for a house or, with a dusting of realism, an entry-level unit  offers a more budget-conscious approach.”

The bank of mum and dad was not an option for recent first-home buyer Kellee Hand, who’d spent more than seven years saving for a deposit.

“I’ve been working since I was 14 and have saved almost every paycheck in hopes of getting a house one day,” she said.

“In the last few years, I was working full-time and going to university too. I tried really hard to get my finances in order.”

Recent first-home buyer Kellee Hand at her new home in Calwell. Photo: Elesa Kurtz

Ms Hand eventually purchased a three-bedroom house in the Tuggeranong region, for just less than $800,000, with her partner, who also spent many years pocketing his money.

“Getting into the market has just been a nightmare,” she said.

“I definitely wouldn’t have been able to save nearly as much on my own. The market is just ridiculous at the moment, and it’s just really unfair for people who are trying to get into the market.

“We spent years scraping the barrel while saving for a deposit and the house we bought, while we love it, is solely a house to get a foot in the door … we want to stay here for 10 years and then buy our dream home later.”

The data showed that first-home buyers hoping to purchase a house sooner rather than later would be better off buying in Belconnen, where it takes 76 months to save a deposit; Gungahlin at 77 months, or Tuggeranong at 78 months.

The areas with the shortest time to save for a 20% deposit on an entry-house for a couple aged 25-34 2021 2021 2020 2020
Canberra regions House Unit House Unit
Belconnen 76 38 61 39
Gungahlin 77 40 62 38
North Canberra 124 45 88 43
South Canberra 154 51 121 50
Tuggeranong 78 50 62 46
Weston Creek 92 72
Woden Valley 113 39 88 37
Molonglo 81 45 60 44

“I’m not surprised that these areas are the fastest areas to save a deposit for. Given that the land values are affordable there … the average property prices is generally more affordable than, say, the Inner South,” said Aaron Lewis of Independent Our Team.

Meanwhile, the area with the shortest time to save for a deposit on an entry-level unit was Belconnen at 38 months. Next was Woden Valley at 39 months, then Gungahlin at 40 months.

“But across the capital, units are highly attractive because there is a big difference in house and unit prices. I wouldn’t see the same gravitation for houses, but it does offer a faster foot in the property door,” Mr Lewis added.

“Even though the time it takes is long, I think it’s still the great Australian dream. It’s a place to call your own, and that could be an apartment, townhouse or free-standing home.”