From deposit to dealbreaker: average house deposit now exceeds $100,000

As house prices continue to climb, aspiring homeowners now need a six-figure down payment to buy a property.

According to Finder 2021 First Home Buyers Report, which surveyed 1,028 first-time home buyers, 11% now need more than a decade to put together a down payment.

This comes as ABS data for January 2021 shows the average deposit needed to secure a mortgage is now $106,743, a 16% increase (+$14,851) since January 2019.

ACT saw the biggest house deposit increase since 2019, with the initial amount required rising 24% to $117,790, followed by New South Wales (23%, $128,469).

The report also found that the average first-time home buyer pays 20% of the purchase price as a down payment.

Sarah Megginson, home loan expert at Finder, said saving for a security deposit is a big financial hurdle for first-time home buyers.

“Potential buyers are bewildered by an overfed real estate market, which shows no signs of slowing down yet.

“Low interest rates have made it cheaper to pay off a mortgage, but it has driven up house prices, making it even more difficult to save for a deposit,” Megginson said.

Finder’s research also revealed that more than a third of respondents (38%) took between 2 and 5 years to save for their deposit, while 25% said it took them between 5 and 10 years.

Megginson said government grants can help eligible buyers accelerate their dream of home ownership.

“Under the first home loan deposit program, eligible buyers can apply for a mortgage with a 5% down payment.

“This means that for a property worth $600,000, you would only have to save $30,000, which is far more achievable than a six-figure sum and can help young buyers get in on the market earlier.

“While this increases the cost of the mortgage over its lifetime through interest, the gains you can make as the property appreciates in value over time could potentially outweigh the cost of the mortgage. additional interest.

“It’s important for first-time home buyers to weigh all of these pros and cons when considering a home purchase,” Megginson said.

State Average first-time buyer loan Average first-time home buyer’s deposit Increase since 2019
ACT $471,161 $117,790 24%
New South Wales $513,876 $128,469 23%
NT $400,000 $100,000 20%
TAS $325,751 $81,438 17%
CIV $452,369 $113,092 16%
Washington $371,048 $92,762 14%
QLD $383,136 $95,784 13%
HER $342,840 $85,710 8%
Australia $426,971 $106,743 16%

Source: Finder, ABS Loan Data

* Analysis assumes 20% down payment.

How to crack the real estate market if you can’t reach your savings goal:

  • Consider annuity. This is where you buy where you can afford and rent where you want to live. If metropolitan prices are out of your reach, you may be able to afford something in a regional location that you can buy as an investor.
  • Enter with friends or family. Rather than buying a house on your own, there are several ways you can share the purchase with friends or relatives. This is a huge financial and legal commitment, so be sure to consult with a lawyer beforehand and make sure everyone is on the same page about what they want from the arrangement. .
  • Find a guarantor. A guarantor provides additional security on a mortgage if you do not meet all deposit requirements as a buyer. While this can help get your claim through, guarantors are also responsible if you fail to repay. This makes it a huge responsibility, which is why most guarantors are parents or relatives.

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About Matthew R. Dailey

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