Time to jump in? First home buyer deposit saving times plunge
Home loan headlines have been, let’s face it, a bit of a downer of late. But the good news is that first-home buyers are now reaching their 20% deposit goal faster.
First home buyers have been delivered a bit of well-deserved good news with the findings of the 2023 Domain First Home Buyer Report.
The analysis shows that first-home buyers aged between 25 to 34 are hitting their house deposit saving goal more quickly compared to April 2022 – a month before the first of ten consecutive cash rate hikes.
State-by-state breakdown
Sydney experienced the biggest decline – a whopping 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 8 years and 1 month in April 2022.
Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14-month drop.
Melbourne (now 5 years 7 months) and Darwin (3 years 6 months) came next, both with an 11-month decrease in saving periods.
Hobart (5 years 8 months), Perth (3 years 7 months) and Adelaide (4 years 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.
Why is it quicker to save a deposit now?
Well, 2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%.
And as property prices fall, so too does the cost of your 20% deposit.
Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.
Overcoming potential challenges
Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.
The increased cost of living means just paying for essentials takes a big chunk of the paycheck, leaving less for savings.
And with home loan interest rates on the up, borrowing capacity has dropped and mortgage serviceability can be difficult.
Also, CoreLogic has reported that house prices have begun to stabilise.
So, as a first-home buyer, how can you speed up the buying process?
Get in on government incentives
Taking advantage of government schemes can speed up your home-buying journey by 4 to 4.5 years, on average.
For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee.
But you’ll have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a mortgage broker (like us!) ASAP is a good idea.
We’ve got the know-how to get your First Home Guarantee application on track.
And, we can see if you’re eligible to maximise your savings by combining other government incentives.
Find out more
If you’re ready to take the plunge and buy your first home we can help get a plan in place to make it happen.
We’ll calculate your borrowing power, assess your finance options, and assist in taking advantage of government incentives.
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