This is how long it takes Brisbane first-home buyers to save for a house

Brisbane first-home buyers have bucked a nationwide trend. They are now taking less time to save for a deposit, with closed borders, government grants and a softening of entry-level house prices launching locals onto the property ladder faster than a year ago.

Despite the city’s soaring property market recently pushing median house prices to record heights, new data from Domain’s First-Home Buyer Report, released on Monday, revealed it now takes the average couple four years and two months to save a 20 per cent house deposit – which is four months less than this time last year.

Brisbane was the only capital city to see savings time slashed over the 12-month period, with Sydneysiders forced to tack an extra six months onto their already painfully slow savings haul – which is now seven years and one month for the average couple.

Time to save for a 20% deposit on an entry-price house

	Entry price	Time to save	Annual change, months	5-year change, months
Sydney	$770,000	7y 1m	6	11
Melbourne	$631,000	6y 1m	0	13
Brisbane	$429,000	4y 2m	-4	2
Adelaide	$405,000	4y 1m	3	4
Perth	$395,000	3y 7m	2	-3
Hobart	$455,000	4y 11m	6	22
Darwin	$440,000	3y 8m	6	-4
Canberra	$691,000	6y	9	20

Source: Domain

Domain senior research analyst Nicola Powell said the data revealed just how sunny the market remains in the Queensland capital – with grants and wage growth easing the squeeze for first-home buyers alongside COVID, which had worked wonders for savvy savers.

“Brisbane bucks the trend really in terms of what we’re seeing across our other cities, and while it doesn’t have the quickest time to save, it’s seen more favourable conditions over the past year,” Dr Powell said.

“It was the only city to see a decline in time for houses while for units it remained stable … and what we’ve also seen is tax cuts and compounding interest on savings have helped speed up that time.

“I think over the past 12 months, we’ve all saved more, and for first-home buyers, it has supercharged their savings pot … the pandemic has also really unlocked an element of affordability. For those first-home buyers who can work from home, they are able to now seek different locations to reside, which opens the door to affordability.”

Time to save for a 20% deposit on an entry-price unit

City	Entry price	Time to save	Annual change, months	5-year change, months
Sydney	$590,000	5y 5m	-4	-6
Melbourne	$440,000	4y 3m	-2	1
Brisbane	$340,000	3y 4m	0	-5
Adelaide	$278,000	2y 10m	0	0
Perth	$275,000	2y 6m	1	-3
Hobart	$390,000	4y 3m	2	20
Darwin	$248,000	2y	2	-18
Canberra	$397,000	3y 5m	0	1

Source: Domain

While the Domain report revealed it takes a first-home buyer just one year to save for a house with a five per cent deposit using the federal government’s First Home Loan Deposit Scheme, Dr Powell warned the road to property ownership was still tough.

“It’s still a long journey time to save … and for any single person, that time is double. So, I think there are two sides to affordability and what we have seen is home loan repayments have improved thanks to falling interest rates, but the hurdle is saving for that deposit,” Dr Powell said.

North Brisbane Home Loans CEO and mortgage broker Patrick Cranshaw said over the past year, the swathe of first-home owner grants released in response to COVID had sent first-home buyer numbers soaring – with young couples quick to pounce on low interest rates and money-saving schemes.

“The property market has also softened in the past two weeks, and there hasn’t been as much activity, and it levelled off a bit, so for some first-home buyers – if they are in a couple situation on $70,000 each – they certainly have the capacity to pay that loan down, so it’s just coming up with the equity and the deposit,” Mr Cranshaw said.

Federal government initiatives and the impact on time to save for an entry-priced home

	Houses		Units
	5% deposit FHLDS	$60k FHSSS (based on couple)	5% deposit FHLDS	$60k FHSSS (based on couple)
Sydney	1y 9m	4y 3m	1y 4m	2y 8m
Melbourne	1y 6m	3y 2m	1y	1y 4m
Brisbane	1y	1y 3m	10m	4m
Adelaide	1y	1y	8m	0m
Perth	10m	10m	7m	0m
Hobart	1y 2m	1y 8m	1y	11m
Darwin	11m	1y 2m	6m	0m
Canberra	1y 6m	3y 5m	10m	10m

Source: Domain

“But I 100 per cent think Brisbane is still affordable when you compare the money they earn to the purchase price … that’s why so many people moved to Brisbane. There’s value here.”

Roxanne Paterson of Ray White Bracken Ridge said while the stars were indeed aligning for local first-home buyers, they were facing incredible challenges due to increased interest from interstate and rising house prices.

“What’s frustrating for them in one regard is when buyer’s agents are out in force as well as investors – they are getting thrown into some pretty significant competition,” Ms Paterson said.

“And they can’t just offer an extra $30,000, but they are in competition with clients who have money at their fingertips.”

In Bracken Ridge, a suburb that Ms Paterson said had always been a hotspot for first-home buyers, the sizzling market sent entry-level house prices soaring over the past 12 months, with $500,000 houses now fetching $100,000 more.

“Here we are that last stop before the end of Brisbane City Council, so we do have a lot of first-home buyers coming in … but now they are having to stretch themselves or go further out for a house. That said, I think they are still giving it a red-hot go,” Ms Paterson said.

It was that enticing melting pot of grants and the inability to travel that inspired Sarah Bauer and Luke Bishop to buy a three-bedroom house on a 600-square-metre block in Arana Hills for $654,000 through Ms Paterson just a week ago.

“We spent the majority of 2020 really knuckling down because we wanted to go into this process with no debt … and COVID helped 100 per cent because we had two overseas trips planned for last year. I mean, my Uber Eats bill probably went up, but in terms of not being able to travel and not go places meant we could save much more,” Ms Bauer said.

“Then we started looking seriously in January … and to be honest we got in as it started to get super hectic and the first house that we put an offer on, we actually offered $30,000 over the listing price, but it sold for $60,000 more, so straight away we thought we were so out of our league,” Ms Bauer said.

“So, we took a step back and had to look at what suburbs were taking off and which ones were still affordable because Brisbane is hectic. We were both set on the north side of Brisbane, and we didn’t want to go further than 15 kilometres from the city as we work there … but then as we got knocked back, we had to look further out.

“The third house we put an offer on (in Arana Hills) was listed at $589,000, and we offered $650,000, and then it sold for $800,000 … there were 46 offers on that one, so you’re just competing with ridiculous offers.”

But while the couple, who spent a solid year saving to boost their own personal pot, confessed the constant knocks almost forced them to step back, it was fear of missing out that kept them in the game.

“We wanted to get our foot in the door, especially if this was going to be the lowest it would be in a while and in the end, I think we were quite lucky,” Ms Bauer said.

Across Greater Brisbane, first-home buyers in Springwood-Kingston enjoyed the biggest cut on time spent saving for a house, where it is now taking 14 months less than a year ago to save a 20 per cent deposit. At the other end of the spectrum, couples looking to buy their first house in Brisbane Inner are facing an extra 10 months of savings time, where a 20 per cent deposit on the median house price is now $182,000.

 

Article Source: www.domain.com.au

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