What Is the Average First Home Deposit?
First home deposit sizes
Owning a home is a dream for many, and there’s no doubt first home buyers have some challenges, not least of which is saving for a deposit. Find out how much first home buyers are saving below.
What is the average first home deposit?
The latest analysis by comparison site Finder found the national average first home buyer deposit was $106,743. It ranged as high as $128,469 for New South Wales, and as low as $81,438 in Tasmania.
First home deposit sizes
-
NSW - $128,469
-
ACT - $117,790
-
VIC - $113,092
-
Australia - $106,743
-
NT - $100,000
-
QLD - $95,784
-
WA - $92,762
-
SA - $85,710
-
TAS - $81,438
Finder simply used Australian Bureau of Statistics' (ABS) loan data, and used a 25% deposit as a yardstick. However, a 25% deposit is not realistic for a lot of first home buyers.
ABS ‘lending indicators’ data shows that the average first home loan size nationwide was a touch over $440,000 in original terms. Assuming a home buyer has a 20% deposit, that’s roughly a $550,000 home value. Or, if borrowers had a 10% deposit, a home value of a touch under $490,000 - lenders mortgage insurance notwithstanding! However, those values seem low, especially if you’re buying a house in a capital city.
Finding out how much to save for a deposit is also a problem many first home buyers face. Reserve Bank data shows the average advertised home loan rate for borrowers with a 20%-or-greater deposit was 2.47% p.a., and for borrowers with less than 20%, 2.58% p.a. Those few points' difference might not seem like much, but on a $440,000 home loan could add up to around $9,000 extra in interest paid over a 30-year term. This, of course, doesn’t take into account any extra fees, or shopping around for a more competitive home loan rate.
How long does it take to save for a home deposit?
Domain’s First Home Buyer Report shows how long it takes the average first home buyer to save for a house deposit across the capital cities:
|
City |
‘Entry Level’ House Price |
Time Taken for Saving a 20% Deposit |
|---|---|---|
|
Sydney |
$680,000 |
6 years, 6 months |
|
Melbourne |
$600,000 |
6 years |
|
Brisbane |
$450,000 |
4 years, 6 months |
|
Adelaide |
$375,000 |
3 years, 11 months |
|
Perth |
$366,580 |
3 years, 5 months |
|
Hobart |
$380,000 |
4 years, 2 months |
|
Darwin |
$362,500 |
3 years, 1 month |
|
Canberra |
$606,060 |
5 years, 5 months |
Domain’s data is based on the 25th price percentile “at the more affordable end of the housing market that is deemed to be more in line with a first-home buyers’ budget”. It also does little in the way of demonstrating availability of homes within this ‘entry level’ price band.
The median full time wage in Australia is about $89,000, or about $67,830 after tax - $1,304 per week. Assuming a borrower is on this wage and saves 20% of their pay cheque for a deposit, it would take them nearly eight years to save for one in New South Wales, using the ABS data for NSW above. You could halve that time if you had two income earners on the same wage. But, of course life happens - kids, holidays, medical expenses - and saving 20% of your pay just for a deposit might not be realistic for some.
If you’re ready to purchase your first home, speak with one of our lending specialists today about getting pre-approved for a home loan so you can begin your home buying journey.
Find out in under 2 minutes if you qualify for one of our low rate home loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
