Saving for a house deposit now takes the average buyer more than 15 years, even when saving up to $400 a month.
Australians looking to enter the property market aim to save an average of $67,474 towards a deposit, according to a survey by financial comparison group Mozo.
If someone is able to save $359 a month, it would take them 15 years and eight months to reach that figure of $67,000.
For those saving less than $200 a month, setting aside money for a mortgage deposit would take at least 21 years and eight months.
Even that savings goal is modest, since only a 10 percent deposit would be enough to buy a $674,737 home, meaning the buyer would have to pay mortgage insurance to lenders.
Despite widespread awareness of rising house prices, 78 per cent of respondents wrongly believed they could save a deposit in just five years.
Saving for a house deposit now takes more than 15 years, even if someone saves about $400 a month (pictured, a house in Frankston North in Melbourne)
Mozo finance expert Rachel Wastell said saving for a mortgage deposit was an elusive target as house prices rose at a much faster rate than wages.
Mozo finance expert Rachel Wastell said saving for a mortgage deposit was an elusive target as house prices rose at a much faster rate than wages.
“Soaring property prices are posing a considerable challenge for buyers, especially in Sydney where the median property price is over $1 million,” he told WhatsNew2Day Australia.
“The fact that prices are outpacing wage growth also makes it harder for aspiring Australian homeowners to move up the property ladder.”
While a house in Sydney is now almost out of reach for all but the very rich, a 10 per cent mortgage deposit of $67,474 could get an aspiring buyer something in the outer suburbs of Brisbane or Melbourne.
There are options in Deception Bay, in the Moreton Bay area north of Brisbane, where the median house price is $644,241, and in Frankston North, in Melbourne’s southeast, where the median is $597,429, according to CoreLogic data showed.
“There is still hope for buyers looking on the outskirts of Brisbane and Melbourne, with some of the outer suburbs still showing listings for homes between $600 and $700,000,” Ms Wastell said.
The affordable end of the property market has seen strong price growth: the median house price in Deception Bay rose 14 per cent in the year to April, while the midpoint of greater Brisbane rose 15.9 per cent to $909,988.
There are options in Deception Bay (pictured), in the Moreton Bay area north of Brisbane, where the median house price is $644,241, and in Frankston North, in Melbourne’s south-east, where the midpoint is of $597,429, CoreLogic data showed.
But there could be hope in Melbourne, where prices have risen a more moderate 3.3 per cent over the past year but are still unaffordable at $935,049.
House prices are growing at double-digit rates in Sydney, Brisbane, Adelaide and Perth.
But Melbourne prices are growing at a slower rate than the 4.2 per cent rise in the wage price index.
That means house prices in the outer suburbs continue to rise at a modest pace, giving potential buyers more time to save, compared to other large state capitals.
By 2024, Brisbane will overtake Melbourne to become Australia’s second least affordable state capital.
Those who want to live in Sydney have fewer options in a city with a median house price of $1.414 million, after an annual increase of 10.7 per cent.
But Tregear, in the city’s outer west, has a more affordable median house price of $688,442.
Those who do not want to live in an outer suburb but want to benefit from rising house prices can consider granting tenancies where someone rents where they want to live and rents an investment property.
Those who want to live in Sydney have fewer options in a city with a median house price of $1.414 million, after an annual increase of 10.7 per cent. But Tregear (pictured), in the city’s outer west, has a more affordable median house price of $688,442.
“This strategy can be an effective way to enter the real estate market, especially given low rental vacancy rates and high rental costs,” Mozo said.
“However, buyers should be careful when selecting property and location as not all areas experience the same demand and rental performance.”
Mozo’s survey of 2,554 adults in January and February found that 41 percent of respondents saved less than $200 a month.
Another 26 percent saved between $200 and $500 a month, compared to 16 percent who saved between $500 and $1,000 a month, 9 percent who saved between $1,000 and $2,000 a month, and 5 percent who saved more than 2,000 dollars a month.
Of those saving less than $200 a month, 62 per cent mistakenly thought they would be able to save for a mortgage deposit in five years.