A Sydney home deposit now means skipping avo on toast for eight years, research says
Australians wanting to buy a home now have to work at least two years longer to save for the deposit than they did in 2020, according to new PEXA analysis. 
PEXA (Property Exchange Australia) is a digital property exchange and data insights business assisting lawyers, conveyancers and financial institutions to lodge documents with Land Registries and to complete financial settlements electronically.
Its analysis shows the time taken to save for a deposit in NSW has nearly doubled to almost eight years today, compared to slightly more than four years in 2020.
That is, as of the September quarter this year, it is estimated to take nearly eight years for New South Wales home buyers to save the median deposit amount.
That's an 83.2 per cent increase during the past three years.
It is estimated to take just more than five years for Victorian buyers, which is an increase of 64.2 per cent.
And it now takes just under five years for Queensland buyers to save their respective state's median deposit amounts, which is a 36.9 per cent increase during the past two years.
PEXA said the data shows the impact of higher house prices and tighter lending criteria on home deposit amounts in recent years.
For the financial year ending June 30, 2023, the median home deposit amount was $119,969 in NSW ($145,000 in Sydney), $84,723 in Victoria ($94,000 in Melbourne) and $78,143 in Queensland ($85,163 in Brisbane), according to the data firm.
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PEXA's head of research, Mike Gill, said the data highlights the increasing pressure on Australians trying to break into the housing market, particularly first-home buyers.
"With higher interest rates and rising property prices, the time to save for a deposit has increased significantly over the past few years," he said.
"This has made the generational wealth gap more apparent, with younger demographics facing growing challenges to enter the property market.
"Our research found average loan-to-value ratios (LVR) peaked at around 83 per cent at the end of 2020 during the onset of the COVID pandemic, meaning homebuyers needed to put down a deposit of only 17 per cent.
"However, as lenders have tightened credit standards in response to increased interest rates, LVRs have trended downwards, increasing the deposits required.
"Coupled with high property prices, home buyers now need to work for at least two years longer to save for their home deposits."
One leading economist said, based on her numbers, it already takes a decade for younger Australians to save up for a home deposit.
"On our calculations, the time to save for a deposit is already at 10-11 years across the eight capital cities, based on actual median sales price and 15 per cent full-time adult earnings," AMP deputy chief economist Diana Mousina told The Drum.
"And yes, the bank of mum and dad is becoming a more important factor behind deposits/guarantors based on some surveys of recent buyers, which is bad for inequality."
ANZ senior economist Adelaide Timbrell agreed.
"Prospective first home buyers with access to generational wealth have an advantage over those who don't have access to help with deposits, since for first home buyers the deposit is by far the biggest hurdle," she said.
But Ms Timbrell also argued rising real incomes in coming years could provide some relief for prospective home buyers.
"It's not unlikely that the time to save a deposit will once again exceed 10 years, as housing prices are likely to go up," she said.
"However, as real incomes rise, the increases in housing prices through 2024 in some areas could be offset by rising incomes."
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