Buying into the great Australian dream of owning your own home is further out of reach as a new report shows property has never been more unaffordable.
The amount of time needed to save for a deposit has reached record levels according to the Cotality Housing Affordability Report.
Twelve years is the period that hopeful home owners now need to have for putting away enough money for a 20 per cent deposit nationally.
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Paying off the mortgage has also reached record highs across the country.
“Despite recent rate dips, the cost of servicing a new loan is stubbornly high, requiring 45 per cent of median household income,” said Cotality head of research Eliza Owen.
The only area where costs have not reached their highest level is how much it costs to service a mortgage.
“This year the portion of income to service a mortgage is not at record highs because of rate cuts this year.”
However she said households were still having to put aside hefty amounts to pay off their mortgage.
“It’s still a ridiculous amount at 45 per cent of national median household income,” Ms Owen said.
How long to get together a deposit
Those trying to get on the property ladder face their first hurdle when it comes to getting a deposit together.
While nationally it is taking 12 years to put together a 20 per cent mortgage, those buying in some capital cities can expect to be saving for even longer.
In Sydney it takes 16.7 years to save for a house deposit, while saving for a 20 per cent deposit for a unit is something that takes 9.5 years.
In Melbourne it is 11.2 per cent to save for a 20 per cent deposit for a house, and 7.4 years for a unit.
Pockets of affordability
Along with Hobart and Canberra, Melbourne was now seen as one of the most affordable cities to buy in Australia.
“We’ve seen a few examples of improved affordability, or even just steady affordability,” she said.
Ms Owen said Melbourne had improved on the affordability scale since 2021.
“It’s improved because of some unintentional factors like a lot of people leaving Melbourne through the pandemic creating less demand.
“There was also a bit of an overhang from the 2010s apartment boom.
“Then there has been more intentional factors, like reducing the minimum land value for land tax payments, which has captured a lot more of essentially investment property owners.
“It seems that has cooled the market.”
Regions also feel the pain
Those living in regional Australia have also seen affordability drop.
“The extraordinary growth in house prices in regional Australia has led to a greater deterioration in affordability.
“It is pretty much putting the regions on par with the capitals when it comes to affordability,” Ms Owen said.
In regional NSW it now takes 12.4 years to save for a deposit for a house and in regional Victoria 10 years.
How do we make property more affordable
“The good news is that we know there are things that can change the situation,” Ms Owen said.
She said key challenges such as increasing housing supply and making planning more streamlined and improving productivity are being addressed.
“These are all good things and those are the kind of things we need to deliver more to make housing more affordable,” Ms Owen said.
“What we are still lacking, though we know it can make a difference, is addressing the supply side, such as taxing housing to make it less attractive as an investment.”
