Good News for First Home Buyers: Saving for a Deposit Got Faster
Home loan headlines have been a bit of a downer lately, but the good news is that first-home buyers are now reaching their 20% deposit goal faster.
First home buyers have been delivered well-deserved good news with the findings of the 2023 Domain First Home Buyer Report. The analysis shows that first-home buyers aged between 25 and 34 are hitting their house deposit savings goal more quickly compared to 2022 – a month before the first ten consecutive cash rate hikes.
State by State Breakdown
Sydney experienced the biggest decline – a 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 7 years and 1 month in April 2022.
Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14 month drop.
Melbourne (now 5 years and 7 months) and Darwin (now 3 years and 6 months) came next, both with an 11 month decrease in saving periods.
Hobart (now 5 years and 8 months), Perth (3 years and 7 months) and Adelaide (4 years and 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.
Why Is It Quicker to Save for a Deposit Now?
2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%. And as property priced fall, so too does the cost of a 20% deposit.
Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.
Overcoming Potential Challenges
Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.
The increased cost of living means just paying for essentials takes a big chunk of the pay check, leaving less for savings. And with home loan interest rates on the increase, borrowing capacity has dropped and mortgage serviceability can be difficult.
CoreLogic has reported that house prices have begun to stabilise, so as a first-home buyer, how can you speed up the buying process?
Get in on Government Incentives
Taking advantage of government schemes can speed up the home-buying journey by, on average, 4 to 4.5 years.
For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee. But you will have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a mortgage broker (like us!) as soon as possible is a good idea.
We have the know-how to get your First Home Guarantee application on track, and we can see if you are eligible to maximise your savings by combining other government incentives.
Frequently Asked Questions
How has the time required to save for a 20% deposit changed for first-home buyers?
According to the 2023 Domain First Home Buyer Report, first-home buyers aged between 25 and 34 are now reaching their 20% deposit goal faster compared to 2022. The time required to save for a deposit has decreased in cities like Sydney, Brisbane, and Canberra.
What factors have contributed to the quicker savings for a home deposit?
Several factors have contributed to this trend. First, there has been a decline in national house prices, reducing the cost of a 20% deposit. Second, wages have grown in both public and private sectors, and the unemployment rate is low. Lastly, rate hikes have led to savings accounts accruing more interest.
Are there any challenges that first-home buyers should be aware of?
Despite the positive trends, saving a 20% deposit can still be challenging due to the increased cost of living and rising home loan interest rates. These factors can affect borrowing capacity and mortgage serviceability.
How can government incentives help first-home buyers?
Government incentives like the First Home Guarantee can significantly help by allowing buyers to pay a deposit of just 5% while avoiding lenders' mortgage insurance fees. However, spots for these incentives are limited and can fill up quickly.
How can Zippy Financial assist me in buying my first home?
Zippy Financial can help you understand your borrowing power, assess your finance options, and assist in taking advantage of government incentives to make the home-buying process easier.
Find Out More
If you are ready to take the plunge and buy your first home, we can help you get a plan in place to make it happen. We will calculate your borrowing power, asses your finance options, and assist in taking advantage of government incentives.
Call us today!
Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Connect with Louisa on Linkedin.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.
