First home buyers are required to save for over a decade on average to afford a deposit on a home, new research has found.
An analysis from comparison site Finder has found that younger first home buyers (FHBs) need at least 16 years to save for a deposit on the average house and 12 years for the average unit if they “started saving today”.
According to the research, this would mean prospective first home buyers would need to save $299,868 for a house deposit and $188,523 for a unit on average.
The analysis results are based on a 3.5 per cent annual growth on home prices, a 3 per cent average savings rate, and a 3.5 per cent growth in the median household income.
The analysis also assumed that households save 25 per cent of their income after expenditures on rent, groceries, utilities, internet, phone and transport.
According to Finder, the amount of time needed to save for a deposit is calculated from how expensive ongoing rental costs are compared to income.
The research revealed first home buyers in NSW face the direst situation, where households average around 20 years of savings for a house deposit of $470,660.
Following this is Tasmania with households required to save for 17 years, amounting to $226,098, while potential buyers in Victoria would need 16 years to save $326,625 for the average house deposit.
For South Australians, a deposit of $211,456 require 15 years of savings on average, while Queenslanders and ACT FHBs need 14 years for $232,960 and 12 years for $312,386, respectively.
Households in Northern Territory and Western Australia have the least amount of time on average to save for a deposit, with eight years of savings needed for $151,584 for NT households and 10 years of savings for $178,697 for Western Australians.
Money editor at Finder, Richard Whitten, stated the significant savings needed are unattainable for many FHBs.
“Wage growth over the past few decades simply hasn’t kept up with skyrocketing property prices,” Mr Whitten said.
“Saving up enough for a deposit, especially when the cost of everything from food, energy and insurance – not to mention rent – is rising, is a big barrier to overcome.
“Buying a home is becoming increasingly out of reach for many Aussies.”
Furthermore, the analysis found that households looking to save for a unit can expect slightly less time to be able to afford a deposit.
For example, prospective buyers in NSW and Tasmania can expect 14 years on average for deposits of $258,914 and $165,720, respectively.