The average Australian now has to wait more than eight years to save on a Sydney home deposit after a pandemic housing price spike.
Meanwhile, the national average wait time has expanded to five years and 10 months after tripling since the 1990s.
Comparison site Finder released the data this week as part of an analysis that revealed the 10 most affordable and 10 least affordable areas to buy a home in Australia.
He found that saving a 20 percent deposit would take more than 13 years in the 10 least affordable areas, but no more than two years and two months in the 10 most affordable areas.
Based on the region’s median house price and average household income, the calculations ignore potential investment income and assume that homebuyers save 20 percent of their income.
“It’s mind-boggling how long it can take for homebuyers to save for a deposit in some of the country’s most expensive suburbs,” said Sarah Megginson, editor-in-chief of Finder Money.
The most expensive Local Government Area (LGA) was Woollahra, NSW, where median house prices are now $ 2.95 million and average incomes at $ 3,104 per week.
Woollahra residents would need to save for an average of 18 years and two months to afford a typical home in the leafy LGA.
On the other hand, the town of Cobar in the NSW hinterland is the most affordable.
His median home price is $ 155,000 and his average weekly income is $ 1,258.
Finder says the average resident would save a deposit in 20 months.
The research comes amid growing fears that many Australians will be shut out of the market, with median house prices rising 20.3% in the past 12 months alone, according to data from CoreLogic.
Although a wave of first-time homebuyers entered the market during the pandemic, that trend dissipated as prices skyrocketed.
The value of first-time home loans has risen from a high of $ 16.2 billion in January to $ 12.9 billion in July, ABS data is displayed.
Investor loans over the same period fell from $ 6.5 billion to $ 9.3 billion per month.
Federal Treasury officials said last month that saving for a deposit is now the biggest hurdle for first-time homebuyers trying to buy a property.
The government has tried to shorten the savings journey by pumping billions of dollars into first-time homebuyers subsidies during the pandemic, but economists have warned those programs are only pushing up house prices.
Under the government’s most generous program – allowing a single parent to buy a house with a 2% down payment – the time needed to save is just over 12 months on average.
The wait times listed above will lengthen in November, however, as financial regulator APRA introduces new regulations to limit buyers’ borrowing power.
APRA will demand that banks apply stricter criteria to loan applications, fearing that rising house prices will make Australia’s financial system too unstable.
But despite the new rules, which will take effect next week, experts say house prices will continue to rise until the RBA raises interest rates.