FHBs face 99% surge in deposit sizes

Data analysed by Money.com.au has revealed that first home buyers now need to save a deposit that is 99 per cent larger compared to 12 years ago, coinciding with the beginning of official property price records.

Since the Australian Bureau of Statistics (ABS) began measuring dwelling values, the average property price has surged from $489,900 in 2012 to $973,300 in 2024.

In 2012, a first home buyer required $48,990 for a 10 per cent deposit, while today, that figure has nearly doubled to $97,330. For those looking to avoid lenders mortgage insurance (LMI), a 20 per cent deposit in 2012 would have been $97,980, whereas today, it stands at $194,660.

Salaries have not kept pace with these rising property prices. In 2012, the average Australian earned $70,158, whereas in 2024, the average full-time worker is earning $100,016 – only a 42 per cent increase.

“The affordability gap for first-home buyers has widened dramatically, making saving for a deposit a near-impossible task,” according to Money.com.au’s home loans expert Mansour Soltani.

“The subsequent jump in deposit requirements is forcing many first-home buyers to either delay homeownership or find alternative financing methods, like borrowing from the bank of mum and dad, or using guarantors and government support.”

Money.com.au also compared the average loan size taken out by first home buyers over the last 12 years with the average property price during the same periods to assess the widening gap.

In 2012, the average first home buyer loan covered 73 per cent of the average property price in Australia. However, due to rising property prices and higher interest rates, today’s average loan only covers 65 per cent of the average house price.

Peter Drennan, Money.com.au’s research and data expert, said: “This tells us the average Australian first-home buyer either needs to come up with a larger deposit or settle for a cheaper property – both of which are increasingly difficult to do in 2024.”

He said that while first home buyer loans are growing three times faster than the overall loan market, purchasing an average home is now harder than ever.

In July 2024, there were 10,937 new first home buyer loans, with one in three originating from Victoria, which experienced a 24 per cent increase for the month. Queensland followed closely with a 29 per cent year-on-year rise. Despite the challenges, first home buyer loans now make up 31 per cent of the home loan market.

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.