A young couple earning the average income for people aged 25 to 34 would now spend an unprecedented 5.2 years saving for a 20 per cent deposit on an entry-level house worth $635,000,or 3.9 years for a unit worth $450,000.
Brisbane house prices have risen,making it tough for first home buyers to purchase.Tammy Law
This is an average of four months longer than a year ago and almost half a year longer than the national average,since the cost of an entry-level house in Brisbane has doubled over the past five years.
The figures,released today in Domain’s First-Home Buyer Report – conducted with Commonwealth Bank-backed digital lender Unloan – showed the Queensland capital bucked a nationwide trend of largely reduced saving times. In comparison,Sydney and Melbourne buyers trimmed one and three months respectively off their deposit saving times for an entry-level house as wages rise. Experts say skyrocketing property prices and low stock levels are to blame.
Brisbane’s inner-city suburbs are typically the toughest regions for entry-level buyers to crack. Moreton Bay’s Cleveland and Stradbroke,alongside the Ipswich Hinterland,are the easiest pockets for first home buyers. There,the average time to save for a 20 per cent house deposit is 4.1 years. Conditions are also easier in Springwood and Kingston,where couples take 4.4 years to scrape together a house deposit.
Domain’s chief of research and economics Dr Nicola Powell said entry-level medians rose 13.4 per cent (for houses) and 15.4 per cent (for units) last year,despite the report revealing the individual post-tax income across Brisbane is $56,201.
“This far exceeds wage growth. There were only three capitals across Australia that saw deposit time increases for both houses and units over the past year,and Brisbane was one of them,” Powell said.
“Then there’s the issue of mortgage stress. We consider the threshold of mortgage stress to be 33 per cent of a couple’s combined income. In Brisbane,for entry-level houses,we’ve reached 42.7 per cent,so we’re well into mortgage stress. For units it’s a much lower 30.3 per cent.
While units offer a more affordable price point for buyers climbing onto the property ladder,Powell said prices were rising at a faster rate than houses.
“I think it’s very likely if you’re a single person you’re likely to be a bit older before you start the property journey,as you’ll require a longer period of time to save – or you’ll need to get support from a family member,” she said.
“The only positive thing is if the cash rate is cut it will aid mortgage repayments.”
Brisbane mortgage broker Brad Donnelly of Vision Finance Collective said he’d never seen such tough conditions for first home buyers,who are battling borrowing capacity constraints amid dwindling affordable stock.
“I have a lot of customers in the Moreton Bay area,and there the ideal price range for a first home buyer is between $600,000 and $750,000. But when you talk to real estate agents,they’re seeing 20 to 30 people at each open inspection for those homes,” Donnelly said.
“Now what we’ve got are customers that can save and do have a deposit,but they’re struggling to find a home,so they’re sitting on preapprovals for up to two years and that’s something I’ve never seen before.”
He said customers hoping to buy closer to the city centre were typically only able to afford units,but that market had clocked strong growth.
“I don’t think it has ever been harder for first home buyers,and we need more stock to come back on the market for that to change,” Donnelly said.
Redcliffe-based agent Adam Clark-Lynch,of Image Property,said many first home buyers can’t afford the improvements that modest homes require.
“I just sold a renovated 1960s cottage for around the $880,000 mark,and in my years of real estate I haven’t seen so many first home buyers at the open homes,” he said.
At Deception Bay,his colleague Ben Hyrapietian said first home buyer demand had surged for townhouses.
“When I first started here you just didn’t sell townhouses in Deception Bay. Now,a townhouse that’s half decent is sold in a week,” Hyrapietian said.
“Anything under $500,000 you can’t keep a hold of.”
He added that the average first home buyer age had risen compared to a decade ago.
Unloan chief executive Dan Oertli said the First Home Buyer report highlighted the demand for housing in Brisbane,particularly from interstate arrivals.
He said the time required to save a deposit was increasing year-on-year,but recommended first home buyers arm themselves with knowledge.
“The biggest challenge for young buyers is having the deposit ready and knowing their borrowing power,” Oertli said.