Samantha Healy, Property Journalist
First published 18 Sep 2023, 2:32pm
Australian homebuyers now need a six-figure deposit just to buy an average house in every state.
Analysis by comparison website shows that even buyers in Australia’s cheapest property market – the Northern Territory – must find a whopping $104,340 to cover a 20 per cent deposit for a median house priced at $521,700.
At the other end of the near impossible spectrum, NSW buyers need to save a mind-blowing $233,500 to save a 20 per cent deposit and avoid lenders mortgage insurance.
To put that in perspective, that is 245 per cent of the state’s average annual earnings of $95,259, with the median house price now $1,167,500, according to the analysis.
Two derelict terraces in the heart of Sydney’s inner west sold half a million dollars over the reserve at auction for $1.9 million
It is not much better in the ACT where homeseekers need $189,580 for a deposit on an average house costing $947,900.
Victorian buyers need $180,960 for a deposit on an average house costing $904,800, equivalent to 189 per cent of the average annual income.
In the Sunshine State, Queensland buyers need to stump up $156,320 for a deposit to cover a median house value of $781,600.
This property at 61 Prince St, Virginia, in Queensland, sold in 12 hours for a new suburb record of $2.45 million.
Meanwhile in South Australia, buyers need $136,940 (median value of $684,700), buyers in Western Australia need $134,200 ($671,000) and Tassie buyers need $132,440 ($662,200).
The research was based on the latest data from the Australian Bureau of Statistics (ABS) which showed that the mean price of residential dwellings nationally rose to $912,700 in the June quarter.
“Despite rising interest rates historically leading to a drop in housing prices, the cost of buying a home in Australia is becoming increasingly unaffordable,” Mozo banking and rates expert Peter Marshall said.
“And borrowers are now searching for more than $100,000 to cover a 20 per cent deposit.”
Saving a deposit has never been harder. iStock
A 20 per cent deposit puts a borrower’s loan-to-value ratio (LVR) at 80 per cent, which is where interest rates start to become more competitive and the need to buy lenders mortgage insurance (LMI) is removed.
“However, this standard 20 per cent deposit is becoming increasingly out of reach for the average Australian,” the research found.
And in further signs that Australia’s property market has gone completely mad, hoarders houses and collapsing dumps are fetching top dollar in places like Sydney.
Recently, a hoarder house on the Central Coast attracted close to 200 people at its auction last week, before going under the hammer well over reserve for $680,000, while a North Ryde auction saw a knockdown sell $405,000 over reserve.
RELATED: Sydney’s dump homes ‘making a comeback’
A hoarder house at 23 Warners Ave in Tuggerawong on the Central Coast has sold for $680,000 at auction, shocking onlookers
It comes after PropTrack data analyst Karen Dellow recently revealed that dramatic mortgage rate increases and rising home prices meant that property seekers in 2023 could afford fewer homes than when records began in 1995.
“For example, households earning the median (or typical) income in Australia can afford just 13 per cent of homes sold nationwide,” she wrote.
“This is a significant fall from the peak affordability levels in 2019-20 and 2020-21 when a median-income household could afford nearly 40 per cent of homes sold across Australia.”
Ms Dellows said the average-income household would now need to save 20 per cent of their income for more than five and a half years to save a 20 per cent deposit on a median-priced home.
And while there are options to get on the property ladder with a deposit as little as 2 per cent, borrowers should be careful, according to Mozo.
“A 2 per cent deposit may seem enticing,” Mr Marshall said.
“But a loan with a lower deposit will cost more in interest over the term of the loan, and higher LVR tiers associated with low deposit amounts can come with higher interest rates.
“With smaller deposits, it’s also very easy for a negative equity situation to arise so it’s crucial to get professional advice from a broker before being enticed by the low deposit amount.”
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