STRUGGLING would-be homebuyers have just been dealt another blow.
A new report from Bankwest shows that the average Australian couple spent 4.4 years saving up for a 20 per cent deposit to buy a median-priced house in 2016. This is an extra two months on last year.
First homebuyers in NSW have it the toughest, having to scrimp and save for an average of 5.7 years to save a $138,600 deposit. Couples in Sydney face a gruelling 8.4 years of saving to raise the funds for a 20 per cent deposit on a median-priced home.
According to figures from CoreLogic, the median house price in the harbour city has grown 13.5 per cent over the past 12 months and now sits at $990,000. A median-priced unit will now cost Sydneysiders $715,000 after values rose 10.8 per cent year-on-year.
Couples in Hobart have the shortest wait with the average required savings time at 3.8 years. Melbourne wasn’t too far off Sydney with couples required to save for an average of 6.2 years to afford a deposit. This is up from 5.8 years in 2015.
PRICE-TO-INCOME BLOWOUT
The reason it takes so long to afford a deposit is because house prices have grown far more sharply than our incomes. A new report from CoreLogic and the Australian National University shows that it took 139 per cent of a household’s annual income in September 2016 to get that 20 per cent deposit together. This is up a whopping 53 per cent from the 86 per cent required in September 2001.
In Sydney, it takes 168 per cent of a household’s annual income, up from 117 per cent in 2001. For those homebuyers in Melbourne, be prepared to save away 143 per cent of your annual income and 114 per cent in Brisbane. In Adelaide, it has grown to 125 per cent and in Perth it has grown to 110 per cent.
URGENT REFORM
The Property Council of Australia is urging the government to tackle the affordability crisis in 2017, saying that stamp duty reform should be a priority, especially in NSW where homebuyers have it the toughest.
“In NSW, the government collects more than $40,000 in stamp duty from a typical Sydney property. Twenty years ago, it collected $4685 from the same property — that’s a 750 per cent increase,” NSW executive director Jane Fitzgerald said.
“The current government schemes in place that are supposed to provide stamp duty relief for people trying to get a foot into the property market are poorly designed and not suited to current market conditions.”
In the state, first homebuyers can get an exemption from stamp duty but only on properties valued up to $550,000. And when the median house price is sitting at $990,000, the exemption becomes “all but useless”.
“By providing tax cuts and encouraging people to buy new stock, we can boost housing supply which is incredibly important in a softening residential market.”
A policy First Home Buyers Australia, an association campaigning for struggling young buyers, would like to see is negative gearing reform.
“For existing property, negative gearing should only be 50 per cent deductible, and not 100 per cent deductible. This means it won’t have that erratic effect that Labor’s policy could have had on the property market,” Taj Singh, co-founder of FHBA has previously told news.com.au.
“Then we are saying 100 per cent negative gearing deductibility should remain for new homes because new homes increase supply and increased supply helps property prices.”
But figures from the Department of Planning, released today, shows that more than 31,000 new homes were built in Sydney in the 12 months to October, the highest annual number of new homes in more than four decades. And Sydney is still the most unaffordable place to live.