Australia's least affordable cities for first-home buyers revealed

First-home buyer hopefuls need eight years of saving to come up with a 20% deposit, report finds

Australia's least affordable cities for first-home buyers revealed


By Mina Martin

Homeownership is becoming less affordable as property prices keep soaring, making it difficult for aspiring first-home buyers to get onto the property ladder, especially in the capital cities.

The State of Nation’s Housing 2021-22 report from the National Housing Finance and Investment Corporation (NHFIC) found Sydney and Hobart to be Australia’s least affordable cities for first-home buyers, with less than 10% of properties being affordable to the bottom 60% of income earners in those markets.

According to the report, the average first-home buyer’s debt was $460,000 – that’s a $50,000 increase from the same period last year, and three times what was seen in the early 2000s. The decline in mortgage lending rates in recent years, however, has reportedly helped mortgage serviceability, RateCity reported.

Despite a rise in median incomes over the past year, it was found that it would take an extra year on average for first-home buyers to save a 20% deposit. That’s eight years of saving – double the length of time it would have taken to save a deposit in the early 1990s, with the size of the deposit increasing fivefold over this time to almost $130,000.

The report also found house prices were up by 21% over the year to December in the capital cities and by 26% in regional areas, due in part to more people working from home and migrating to larger houses in regional areas, especially in NSW and Victoria, because of the COVID-19 pandemic.

With net overseas migration (NOM) expected to return to pre-pandemic levels by 2024-25, demand for housing may start to exceed the available supply. Shorter housing supply could potentially lead to increases in house prices and rents, with new housing taking up to six years to build due to lack of available development sites, RateCity reported.

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