Fast Track Saving for a House Deposit or Fast Track Your Savings?
Property purchasers need to stump up a twenty per cent deposit in order to buy a house, but how much that actually is depends on the value of where and what you want to buy. How long it takes to get there depends on you.
How much do you need?
Working with averages, to buy a house in Sydney for $1.1million1 , purchasers require a deposit of $220,000.00. For a mid-market home currently valued at $1.7million, buyers need an initial $340,000.00.
Those deposit amounts look large enough, but they can look even larger when compared to Sydney’s average, annual household income of just over $109,0002. Sydney’s average dwelling value to annual income ratio is now at 10:1 – far higher than the Australian average of 6.81:13. In plain English, this means that Sydneysiders are buying homes that are ten times their annual income and attempting to save a deposit that is twice their salary. Assuming that Sydney households can save 15% of their annual income, it will take an average income earner 13.5 years to put aside that elusive twenty per cent.
‘In plain English, this means that Sydneysiders are buying homes that are ten times their annual income and attempting to save a deposit that is twice their salary.’
Saving a deposit can be done. But how?
For first home buyers, cash is key and aside from the standard savings advice – lose the car, pay yourself first, eat in not out etc, a new trend is emerging to include sales in saving for a home deposit. Gig economy incomes such as Airtasker and Uber are one way to earn extra income, but The Gum Tree Second Hand Economy Report4 shows that Australians have around $4200 in unwanted, saleable goods lying around. Add this $4200 to the average income earner’s deposit savings each year, and it knocks 3.74 years off the time it takes to get to that elusive $220k. Second and subsequent home owners can employ the same savings strategies, paying the additional income into their mortgage.
An extra $4200 per year certainly doesn’t go astray, nor does shaving 3.74 years off the time it takes to save a deposit but there’s still a better way to save money and get into the property market sooner.
A purchaser who has followed the Buying Process5 may value a Sydney home listed for $1million at $980,000 and engage Hello Haus’ expert negotiators to secure it at that price. That $20k saving has already reduced the required deposit from $200k to $196,000 and if we secure the property for the price you set, we don’t charge.
If Hello Haus could bargain that price down further, to $960,000, the deposit price reduces to $192,000, allowing you to buy sooner, save on the purchase price, save on your deposit and reduce stamp duty costs. A smaller mortgage also means huge interest savings over the life of your loan.
Follow the Buying Process and engage Hello Haus property agents to secure your property at the best possible price and conditions. With more than two decades’ real estate experience as agents, vendors, purchasers, developers and residents, we negotiate on your behalf to ensure the best possible result. We work for free unless we get you the result required, no win = no fee. We’re experts in saving you money.