A “TYPICAL” first homebuyer in Australia now needs 11 years to save a 10 per cent deposit and a whopping 40 years in Sydney, according to new modelling.
And if house prices continue to outpace income growth at the rates of the past five years, first homebuyers would likely never save enough without assistance, most likely from mum and dad.
UBS economist Scott Haslem says the modelling by the investment bank shows the housing affordability imbalance is “extreme”.
“In the past five years, house price growth averaged 7 per cent, far above household income averaging only 4 per cent,” Mr Haslem said in a research note.
“Our model suggests if these trends were repeated ahead, a potential first homebuyer would likely never be able to save a 10 per cent deposit to buy a home.”
UBS’s modelling assumed an average annual wage of $80,000, with a savings rate of 5 per cent each year for a $400,000 property. Future home prices were assumed to grow in line with household income, at 3 per cent a year.
Mr Haslem said the deposit for an average Sydney house, priced at $1.2 million, would take about 40 years to amass.
It comes as industry figures reveal sales of new homes rose slightly in April. However, developers are concerned the improvement will not halt a continuing weakening in construction and buying activity.
The Housing Industry Association report shows sales of new houses and flats rose 0.8 per cent nationally in April.
HIA senior economist Geordan Murray warned the rise was too meagre to negate a continuing downward trend and changes around state government housing policy were creating more uncertainty.
The NSW Government this week announced it would hike taxes for foreign property investors and cut stamp duty concessions for all investors.
The measures will fund stamp duty discounts for first-time buyers.