Nearly 30 per cent of first home buyers had to save for more than half a decade in order to buy a home.
Mortgage Choice’s annual First Home Buyer survey found 29.2 per cent of respondents who purchased a property within the last 24 months spent more than five years saving a property deposit.
“I am not surprised to find that one in every three first home buyers had to save for more than five years before buying their first home. The reality is house price growth continues to outpace the growth in incomes, which means first home buyers are forced to save for longer,” Mortgage Choice CEO John Flavell said.
According to the Australian Bureau of Statistics, the average income for an Australian full-time worker rose 2.22 per cent to $78,832 over the past year.
Over the same time frame, property prices in Australia have climbed 7.1 per cent to $575,000, according to the latest data from CoreLogic.
“Interestingly, while those first home buyers who bought a home within that last two years said it took them more than half a decade to save their property deposit, those who are planning to buy their first home soon believe it will only take them ‘one to two years’ to save their deposit,” Mr Flavell said.
“When it comes to buying property, first home buyers may feel as though two years is a long time to save, but in reality, saving for a property can take quite a while.
“Even if you’re a dedicated saver who diligently puts away a portion of your income into your savings, it’s still very time-consuming to save the amount you need for a deposit.
“And, with house prices consistently rising, the deposit size needed continues to grow.
“Day to day expenses such as groceries, rent, and transport costs, can also impact on a first home buyer’s ability to save.”
Mortgage Choice provides five tips to help first home buyers reach their savings goal faster.
Have a realistic savings plan
Take control of your finances by drawing up a practical savings plan for the month. Factor in regular expenses such as going out, transport and rent, as well as any bills and debts. Consider what luxuries could be reduced as these will help make a difference to your savings capacity. At the end of the month, have a look at your plan and, if necessary, reassess your spending.
Consider switching lenders
If you have kept your finances with the same lender since your first job, it might be a good idea to have a look around and consider switching to another bank. Today, some lenders are actually offering financial incentives if you switch, which could help you to boost your savings faster.
Sell your unused items
You could make some quick money by selling belongings you no longer use or need. Online outlets such as eBay and Gumtree are great places to put your items up for sale and watch the cash come in.
Pay off debts
Credit cards and personal loans can easily get out of hand if they are not managed properly. Paying off debts will not only maximise the amount you may be able to borrow when it comes to applying for a mortgage, but it will also help you free up some of your cash flow and allow you to save more money faster.
Save 10% of your income
Saving a designated amount of your income takes discipline, but it is financially rewarding. It is advisable to set up a savings account where you put in 10% of your pay as soon as it comes through. To reduce the temptation to spend it, you may want to open a savings account with a different lender and not get a debit card connected to the account.