The average first homebuyer couple need more than four years to save a 20 per cent deposit for a home, new research has shown.
The third annual Bankwest First Time Buyer Deposit Report has shown the time it takes a first time buyer couple to save a deposit has decreased marginally since last year, falling to 4.1 years from 4.3 years.
In order to save a 20 per cent deposit for a home, buyers in Sydney would have to save the longest, depositing away 20 per cent of their annual income for 5.7 years. Melbourne buyers would face the second-longest period to accumulate a deposit, with a saving time of 5.4 years. Five years ago, the time take was 3.8 years.
Bankwest senior analyst Tim Crawford said first home buyer participation has fallen 35 per cent since last year, and has hit a seven-year low.
“The fact that first time buyers are taking longer to save a deposit, especially in capital cities, directly contributes to this drop in new buyers entering the property market,” Mr Crawford said in a press release.
The Bankwest report has suggested that this increased saving period, combined with the mounting cost of living, the removal of the FHOG Boost and general consumer wariness, have contributed to the sizeable slump in first homebuyer participation.
“In order for the property market to prosper there needs to be a consistent number of first time buyers, as historically this has been the catalyst for growth in the sector,” Mr Crawford said.
NOTE: The third annual Bankwest First Time Buyer Deposit Report tracks the time it would take for ﬁrst time buyers to save a deposit in 544 local government areas (LGAs) across Australia over the ﬁve years to June 2011. The report quantiﬁes how long it would take a ﬁrst time buyer to save a 20 per cent deposit based on local incomes and local house prices and the level of the First Home Owners Grant and state government support. Data has been sourced from the Australian Bureau of Statistics (ABS) census, the ABS Wage Price Index and Residex. Deposit savings times have been calculated on the basis of a ﬁrst time buyer couple setting aside 20 per cent of their combined pre-tax income annually. The calculation assumes the savings are deposited into an online savings account each month and earn interest on this basis.