6 months shaved off deposit saving time: Domain

With property prices having fallen amid a higher interest rate environment, the time taken for a first home buyer (FHB) couple to save for a home deposit has also reduced.

According to Domain’s annual First Home Buyer Report, it took an average of four years and 11 months for a couple to save a 20 per cent deposit on an entry-priced house in February 2023.

This was a drop of six months on February 2022, when it took an average of five years and five months.

All but one capital city saw the time to save for a deposit fall between February 2022 and February 2023, with Adelaide being the exception. 

For a couple looking to buy their first home with a 20 per cent deposit in the South Australian capital, it now takes an extra month to get the cash together — at four years and nine months. This can be partly explained by the fact that property prices in South Australia have continued to rise.

Similarly, Perth home buyers only saw a slight difference in time savings between February 2022 and February 2023. Property prices in the Western Australian capital have been faring strongly recently, which may account for the fact that just a month was shaved off the deposit saving time. It takes the average FHB couple three years and seven months to save for a house in Perth.

At the other end of the scale, the largest time savings were recorded in Sydney and Canberra — where house prices have fallen quickly from their record peaks in 2022 — with Domain data showing that it was 13 months faster for couples to save for a deposit in these two cities. 

In Sydney, which remains the most expensive state to buy property in and therefore which experiences the longest saving times, it took around six years and eight months for a deposit to be saved in February 2023, whereas it was six years exactly in Canberra.

It now takes four years exactly for an FHB couple in Brisbane to save a 20 per cent deposit, according to Domain, down by 11 months in the past year.

Nine months have been taken off the savings time for Melburnian FHB couples (five years and seven months) and four months in Hobart (now five years and eight months).

Darwin, however, only requires FHB couples to save for three years and six months, the fastest time to market for any capital city (and nine months down on 2022 figures).

For units, it ranged from two months shorter in Perth and Darwin to eight months shorter in Sydney and Melbourne. 

Noting the new data, Domain has attributed the overall drop in time taken to save for a deposit to falling property prices, higher interest rates on saving accounts, and increased wage growth.

“A time machine has been offered to first home buyers across Australia, as falling property prices in certain cities, higher interest rates accrued on savings and wage growth have aligned to reduce the time to save for an entry-priced property deposit,” Dr Nicola Powell, Domain’s chief of research and economics, said.

“Nationally, for a couple, it’s now become six months quicker for a first home buyer to purchase an entry-priced house and two months quicker for an entry-priced unit since this time last year.

“Previously, rock-bottom interest rates greatly benefited mortgage holders, making it cheaper to borrow and repay a home loan. However, it was a key driver of property price growth, making time to save a deposit longer. This narrative has flipped since the Reserve Bank of Australia embarked on one of the most aggressive rate hiking cycles in history, escalating the cash rate to over a decade high. 

“Now in 2023, first home buyers are facing less competition and softer prices, reshaping the affordability conversation.”

[Related: Property market stabilisation ‘a blip’: AMP chief economist]