Saving a home loan deposit can take a number of years, especially when home prices are continually rising. But, there are ways that you can save faster providing that you are smart with your money and learn new money management skills.
According to research, a younger person on an average wage, who is looking to buy a home in Sydney may take up to 14 years to save a 20 percent deposit. This is four years longer than the national average of 10 years.
Sydney residents that are seeking to buy a home have a longer wait because property prices are currently rising faster than incomes. This is beginning to reduce housing affordability, which as CoreLogic RP Data state, is being eroded as Sydneys median home price has risen by 16.6 percent over the last 12-months, and almost by 40 percent over the last 3 years. The median home price in Sydney currently stands at $900,000. In comparison, the Australian Bureau of Statistics (ABS) report that the average NSW income has grown by only 5 percent over the last year.
Capital City Deposit Saving Times
With median home prices rising, the best cities to buy in may be those that are the most affordable. In Australia, based on saving 15 percent of the average income in each city and a 20 percent deposit, it will take you between6 years and 10 months in Hobart to 14 years and 1 month in Sydney to save enough for a home deposit.
Lets look at the breakdown for each city from the least expensive to the most expensive.
|City||Av. Home Price||20 Percent Deposit||4 Week Savings||Time to Save Deposit|
|Hobart||$315,000||$63,000||$716||6 years 10 months|
|Adelaide||$405,000||$81,000||$744||8 years 5 months|
|Brisbane||$455,000||$91,000||$726||8 years 10 months|
|Perth||$510,000||$102,000||$887||8 years and 11 months|
|Canberra||$535,000||$107,000||$899||9 years and 2 months|
|Darwin||$515,000||$103,000||$805||9 years and 11 months|
|Melbourne||$560,000||$112,000||$778||11 years 1 month|
|Sydney||$772,200||$154,000||$842||14 years 1 month|
Of course, the Catch-22 here is that by the time you save enough for a home deposit, based on these figures, home prices would have risen considerably. So this means that you have to save faster so that you can get into the property market sooner.
15 Tips to Help You Save for a Home Deposit Faster
1. Stop renting Move in with family or friends and pay board. This way youll be able to put the money you wouldve paid for rent into a bank account.
2. Buy a cheaper property If you cannot afford to buy a home at median value, then buy a property worth less. This way you wont need to borrow as much.
3. Buy a unit, rather than a house Units typically cost less than houses to buy. So purchase a unit to begin with. You can always sell it later down the track and then upgrade.
4. Buy and hold Buy a more affordable property and then sell this 5 years later for a profit. You can then use the money you made to buy a bigger home in a more desirable location.
5. Be disciplined Its easy to spend money, but harder to exert control and save. So rather than buying everything you see, ask yourself if you really need it, and if youll actually use it.
6. Dont buy new Rather than wasting your money on buying new items that quickly depreciate in value, consider buying second-hand goods that are in good condition. Youll save a bundle.
7. Create a second income If you currently work for an employer, then consider advertising your skills and doing extra work outside of your everyday occupation. For instance, if youre a mechanic then you can fix other peoples cars outside of work hours and then save the money you earn.
8. Shop at discount stores Dont stop at the service station to buy drinks or nibbles, instead go to the supermarket. Also look for name brand shampoo, conditioner, deodorants and skin care products in discount stores. You can save yourself a great deal.
9. Rent out a room or garage If you rent and have a spare room or even a garage, then consider subletting to reduce your rent.
10. Downgrade your car Many people own 1 to 2 cars and have one that is more valuable. Your cars can be sold and you can buy a cheaper, more economical vehicle, and put the rest of the money you have into your savings.
11. Sell unwanted items Go through your home and put any unwanted items in a corner. You can then setup an eBay or Gumtree account and start selling your goods. The money you collect can then be put into your savings account.
12. Enlist the help of family and friends If youve got a birthday or Christmas coming up, then ask family and friends to deposit money into your home savings account instead of giving you a gift.
13. If you have a partner then encourage them to save as well Two heads are always better than one, the same can be said of wallets and purses. Learn to save together. If you have two separate bank accounts, then create a joint one. This then makes your spending more accountable so you spend less.
14. Invest with a friend or family member If youre single, then consider buying a home with a friend or family member so that you can pool your resources. The more friends or family members, the less of a deposit you need.
15. Build a duplex If you buy with family or friends you may want to consider buying land and building 2 homes on individual titles. You can have a home each or live in one and rent the other out until both properties are paid off.
Are you looking for an affordable home loan? If you said yes, then get touch with eChoice today, we can help you.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!