Buyers of Melbourne’s first home are facing rising deposit barriers

“It’s really challenging, and affordability has been a barrier for first-time buyers to enter the market – they have not been able to keep up with that level of price growth.”

For an entry-level device up to $ 460,000, the picture was brighter. The average time to save was four years and four months, one month less than a year ago.

First-home buyers could save faster on homes in the most affordable neighborhoods, such as the Melton / Bacchus Marsh area (58 months), the Wyndham (63 months) and the Broadmeadows / Tullamarine area (64 months). The Boroondara area would take the longest time with 210 months.

Units in Melbourne’s inner city also offered relatively short time savings (43 months) after investors evaporated from the CBD during international border closures and shutdowns.

Once a couple has purchased, they will need 28.2 percent of their income to repay their mortgage, just below the 30 percent threshold considered to be mortgage stress. Unit buyers would spend 18.9 percent of their income on refunds.


Senior economist Felicity Emmett of ANZ said home values ​​rose nearly 10 times faster than wages last year.

“What we’ve seen is a pretty significant boost in the time it takes people to save up for a deposit – it’s really the deposit barrier that makes it difficult for people to enter the market,” Emmett said.

“[Dwelling] “prices have risen so much that it would require a really significant drop in prices or a huge increase in income to bring that kind of affordability ratio back to something close to the long-term average.”

Although house price growth has begun to flatten out and is expected to fall as interest rates are expected to rise, Mrs Emmett doubted that it would improve house affordability.

“Higher interest rates mean that the repayment of the mortgage will be significantly larger, and that makes housing more expensive,” she said.

Price increases have stopped some hopeful first homes in their tracks.

Price increases have stopped some hopeful first homes in their tracks.Credit:Penny Stephens

“We have had this really big rise in house prices, it is very unlikely that we will see it reversed … [it’s] a sustained rise in house prices, which means that it is even more difficult for first-home buyers to enter the market. ”

Ray White’s chief economist Nerida Conisbee said it was much harder for first-time buyers to buy now after prices rose through the pandemic.

“It not only means they have to have a bigger deposit, but they also have to have a bigger loan,” she said.

She noted the high levels of first-home buyer activity in 2020 due to government incentives and reduced competition from investors.

It may not be easier to buy a home when interest rates rise.

It may not be easier to buy a home when interest rates rise.Credit:Joe Armao

Now there are headwinds such as threatening interest rate hikes, rising construction costs that could limit the amount of new construction, rising rents and the reopening of international borders, she said.

But a slowdown in price growth this year would be welcome for new buyers.

“We’re not going to see these galloping growth rates we saw,” she said. “A quieter market is a better market for many people, and first-time buyers are one of them.”


40 Forty CFO Will Unkles has noticed an increase in the time it takes first home buyers to save over the last six years.

“During that time, we have had minimal wage growth while property prices have risen,” he said.

“What counteracts is probably the proliferation of gifted funds over the last 18 months has been significant.”

He said he used to see parental assistance in about half of the first homebuyer loans he arranged, but said it was now closer to three-quarters.

“The parents’ mindset, when they can, is that ‘if I can, I should really help with deposits,'” he said.

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