Buying a house: the great Aussie dream or the great Aussie nightmare?

by Chris Lang on July 12, 2010

Saving Money Let me ask you a question:

If you’re 25 now and dreaming of buying a house, how old will you be when you actually move in?

According to the latest report from Bankwest, the correct answer is “almost 30, and you can’t do it alone”.

But why? Because the time it takes a young couple (not a single person, but a couple!) to save $85,000 for a deposit (a mere 20% of the median house price) is 4.5 years. Buying a unit won’t be much of a shortcut – you’ll have to spend 4.3 years saving, almost the same time.

Shocking? That would be an understatement.

This calculation implies that a couple should save 20% of their gross income annually, to get there. This means that it will be even a larger proportion of their net income.

Just one year ago, instead of saving 4.5 years, the same couple with the same income had to save up for just 3.7 years. This is the problem with boosted government grants, you see – they blow up the prices out of proportion, and then the grants are reduced to pre-boost levels – but the prices remain ridiculously high.

I don’t really see a way around this situation. Unless house prices return to reasonable levels due to some divine intervention, or unless people are willing to compromise and choose to buy a house in a much less expensive area, it will be necessary save for that long. Not many people will be in a position where they can save more money faster, because it takes at least 2 major, not easily achievable, components – a high wage job and discipline.

Those interested to see areas where they can buy a house quicker should have a look at the maps in the report – the color-coding shows which areas are more affordable then the others. Choosing a more affordable area can halve the time spent saving.

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{ 2 comments… read them below or add one }

ft lauderdale movers July 23, 2010 at 9:12 am

Interesting data, but I really don’t think the situation is that bad. Why shouldn’t it take 5 years for a couple to save for a home? Do you really need your own home at 30? I understand your point, though, especially when you compare the current situation to not too long ago when it was almost a full year of savings less.

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real estate website design July 24, 2010 at 9:30 pm

I’m 37, single with no children and unless I meet someone, the thought of being able to afford my own place seems a very distant reality. The cost of housing is certainly out of balance with that of typical incomes. Especially when you’re single.

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