Mortgage house deposit: How long to save 20 per cent in Sydney, Melbourne, Brisbane, Perth

Australians looking to buy a house in one major city need to spend 14 years saving up for a 20 per cent mortgage deposit, new data shows. 

Those wanting to get into the property market in most major cities will need to save for at least a decade to afford a home with a backyard, an ANZ-CoreLogic housing affordability report released on Monday revealed.

That’s based on the median, or middle, household income covering what couples in each city typically earn between them to get the middle-market house.

While rising interest rates have brought down prices, houses in Australia’s biggest cities are still unaffordable unless those looking to buy their first home consider a more far flung capital city.

Otherwise a working couple earning six figures between them will continue to struggle as high immigration pushes up prices again during a rental crisis.

Sydney 

Those looking to buy in Australia’s most expensive big city typically need to spend 14.3 years saving up a 20 per cent mortgage deposit – the level of savings needed to avoid having to pay costly lenders mortgage insurance.

Saving up the required $250,751 is a big ask in Sydney, where the median house price is $1,253,759.

But it was even worse a year ago, when it took 17.1 years to save up for that deposit, back when interest rates were still at a record-low of 0.1 per cent.

Since then, the Reserve Bank’s 11 interest rate rises in a year have caused a 12 per cent price drop.

The deposit-saving calculations were based on a prospective home buyer putting aside 15 per cent of their salary, a year, to hit that savings goal.

In Sydney, the median weekly household income was $2,077, or $108,000 a year, in the 2021 Census. 

Australia’s most overcrowded city is so unaffordable a new borrower would be spending more than half, or 51.6 per cent, of their income on mortgage repayments, and that’s based on the combined values of houses and units.

Melbourne 

Melbourne was a little less unaffordable, taking 11.4 years to save up for a mortgage deposit in a city where $907,220 is the median house price, following a 10.1 per cent annual decline.

This is in a city where $1,901 is the mid-point weekly household income, adding up to $98,852 a year.

Brisbane 

In Brisbane, it took 10.1 years to scrape together the necessary funds, in a city where $781,881 is the median house price, following an 11.8 per cent drop during the past year.

The Queensland capital has a median weekly household income of $2,068, or $107,536 annually.

Perth 

Perth was a little more affordable with prospective borrowers needing to save up for 7.7 years in a city where the median house price is $599,240, following a small 1.5 per cent increase that has defied the interest rate rises.

Melbourne was a little less unaffordable, taking 11.4 years to save up for a mortgage deposit in a city where $907,220 is the median house price, following a 10.1 per cent annual decline (pictured is Flinders Street station lit up in purple for the Coronation of King Charles)

The resources-rich city has a median weekly household income of $1,865, or $96,980 a year.

But in most parts of Australia, it takes at least a decade to save up for a mortgage deposit.

Hobart 

While Hobart’s median house price of $692,361 is much cheaper than Sydney or Melbourne, it still takes 10.8 years to save up for a deposit.

That’s because the city’s mid-point household income is $1,542 a week or $80,184 a year.

The typical combined salary for a working couple in Tasmania is less than Australia’s average, full-time salary of $94,000 for one person. 

Adelaide 

Adelaide is in a similar position, with a saving time of 10.8 years in a city with a median house price of $697,909 and a mid-point weekly income of $1,365 or $70,980 a year.

Perth was a little more affordable with prospective borrowers needing to save up for 7.7 years in a city where the median house price is $599,240, following a small 1.5 per cent increase that has defied the interest rate rises

Darwin, with a median house price of $573,534, is the most affordable capital city market, and it takes just 6.5 years to save up for a mortgage deposit (pictured are the Mindil Beach markets)

Canberra 

Canberra’s median house price of $946,463 is dear by national standards but saving up for a deposit typically takes 9.6 years in a city where the median weekly income is much higher at $2,419 or $125,788 a year.

Darwin 

Darwin, with a median house price of $573,534, is the most affordable capital city market, and it takes just 6.5 years to save up for a mortgage deposit in a place where the mid-point weekly household income is $2,209 or $114,868 a year.

The alternative 

Young Australians struggling to save up for a 20 per cent deposit can buy a more affordable apartment or apply for the federal government’s First Home Guarantee.

First Home Guarantee applicants only need a five per cent deposit, with the taxpayers underwriting the rest.

House prices last month rose in every state capital city, following an influx of international students and skilled migrants.

‘Looking forward, given low vacancy rates and high immigration, rents are likely to continue to rise solidly,’ the report said.

‘Overseas migration patterns suggest that demand will remain skewed to Melbourne and Sydney markets, while expensive regional markets are likely to plateau against affordability constraints.’

The national rental vacancy rate is an ultra-tight 1.1 per cent.

The Treasury Budgets papers forecast a record net annual overseas migration level of 400,000 in 2022-23, followed by another 315,000 in 2023-24, with the bulk of visitors settling in Sydney and Melbourne.