Deposit disaster: Home dream now four times harder

The dream of homeownership is slipping further out of reach

Queenslanders now take four times longer to save a home deposit than Baby Boomers did, as surging property costs push the average age of first-home buyers close to 40.

Shock new data shows a Brisbane household earning a typical wage would need to save their entire earnings for 104 weeks in 2025, compared to just 28 weeks in 1975, to fund a 20 per cent deposit for a median-priced home.

The exclusive analysis by MCG Quantity Surveyors compared a deposit of $188,000 for a Brisbane home now priced at $940,000 with just $4,740 on a $23,700 property 50 years ago.

The deposit burden has risen almost 40 times

While the deposit burden has risen almost 40 times, average wages have grown only from $170 a week to $1,800 – a tenfold increase.

MCG managing director Mr Mortlock said Brisbane had recorded “one of the sharpest long-run deteriorations” in affordability among the capitals”, stepping up to 31 weeks in 1985, then 45 weeks in 1993 and 63 weeks in 2005, easing slightly to 61 weeks in 2015 before surging to its current high.

“Even if Brisbane had merely held the 2015 deposit multiple, today’s median would be near $549,000,” Mr Mortlock said.

“The core story is straightforward – prices have compounded faster than wages.

“And until we build more housing, we’re going to be talking about the same thing in a few years, only the problem will be even worse.”

MCG managing director Mike Mortlock

While most recent data from the Australian Housing and Urban Research Institute (AHURI) put the average age of first home ownership at 36 in 2020, that is trending up at an alarming rate, according to the Institute’s Dr Michael Fotheringham.

“It won’t be long until 40 is the average age of a first-home buyer in Australia, as the average price that first-home buyers are paying continues to skyrocket,” Dr Fotheringham said.

“Twenty-five years ago, the average loan size for a first-home buyer was $270,000 and average purchase price $330,000.

“Now, with the average purchase price $850,000-plus, you need to have saved up significant sums of money and that really isn’t going to be a first job – most people will need to have progressed their career to be able to do that.”

Wages have not kept pace with surging demand for a dwindling supply of homes.

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AHURI’s research shows the affordability crisis had delayed the age of home ownership from 22 in 1995, with significant societal consequences as it continued to climb for buyers without access to financial assistance.

“One consequence of that is family formation is happening later as people are waiting till their late 30s to buy a home and settle down as couples because it takes that long to save up,” Dr Fotheringham said.

“There is a correlation between that and having less children than we used to because many people wait to buy a home till they have kids.”

The Australian Housing and Urban Research Institute managing director Dr Michael Fotheringham. Picture: Supplied

Buyers agent Lauren Jones said many first-home buyers were forced to either delay their entry to the market, or adjust their expectations.

“Increased overall costs associated with buying a home is often creating a conversation with first-home buyer couples as to whether they choose to buy a home first, or start a family first,” Ms Jones said.

“Single people tend to compromise on the style of dwelling — opting for a unit or a townhouse — whereas couples and families tend to compromise on location, looking to the next suburb further out where they can find a more appropriately sized home.”

Mr Mortlock said the MCG’s data served as a yardstick only, as it assumed households could save 100 per cent of their income.

Buyers agent Lauren Jones

“Because it ignores tax and essential spending, the deposit multiple understates the real time it takes to save, but it does let us compare cities and eras on a like-for-like basis,” he said.

“Since Covid, inflation in rents, insurance, utilities and groceries has crushed household saving rates. That means the lived experience is tougher than the deposit multiple alone suggests.”

Separate research by MCG using PropTrack figures reveals home buyers in some of the state’s priciest markets in Brisbane and the Gold and Sunshine Coasts are forking out more than $100,000 in stamp duty alone.

MCG’s figures put today’s top buy-in at $214,837 for an investment property in Surfers Paradise on the Gold Coast, with buyers in another seven markets also up for six-figure transfer costs: Mermaid Beach, New Farm, Noosa Heads, Ascot, Broadbeach, Minyama, and Sunshine Beach.

First-home buyers were finding ways into the market with smaller deposits

But the government’s stamp duty concession for first-home buyers shaves thousands of the purchasing costs in many city and regional areas, with nothing payable for properties priced under $700,000 and a discount for homes up to $800,000.

Mr Mortlock also noted 20 per cent deposits were no longer the norm, with many buyers using either a 10 or 5 per cent deposit.

Ms Jones said the government’s New Home Guarantee scheme requiring only a 5 per cent deposit with no LMI had intensified competition for homes priced under the threshold of $700,000 in Brisbane.

“It is almost impossible to buy a house anywhere in Brisbane under that price.”

A spike in interstate migration since Covid has added to the housing market pressure cooker

She said first-home buyers were increasingly exploring rentvesting or purchasing in regional locations as viable strategies to enter the market.

“I am also seeing many first-home buyer clients taking advantage of bank policies using parents as guarantors in order to get in the market faster.

“I find parents want to ensure that their children are buying good properties with their guarantee attached, so that they reduce risk for themselves,” she said.

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