MEDIA RELEASE
EMBARGOED UNTIL 12.01AM FRIDAY, 19 DECEMBER, 2014
First time home buyers on the rise in Western Australia
Strong wage growth over five year period overcomes rising property prices
The number of first time home buyers in Western Australia has increased by 3.4 per cent in
the year to June 2014 to 20,608, up from 19,933 in 2013. Western Australia stands out from
the national average, where the number of first time home buyers is down by 11.6 per cent
this year.
The sixth annual Bankwest First Time Buyer Deposit Report, the latest instalment from
Bankwest’s Financial Indicator Series, has revealed the average first time buyer couple in
Western Australia would need to save for 3.7 years to raise a 20 per cent deposit to buy a
house, below the national average of 4.1 years. Western Australia’s figures are up from 3.6
years in 2013, but lower than five years ago, when it would take 3.9 years to save for a first
home in 2009.
Additionally, wage growth has outpaced median house price growth (22.6 per cent
compared to 7.6 per cent) over the past five years in Western Australiai. This is likely to have
contributed to the decline in savings time over the past five years for West Australian first
time buyers.
“While many states have experienced longer saving times due to population growth and the
impact on property prices, the opposite is true for Western Australia,” said Ian Rakhit,
Bankwest Head of Specialist Banking. “Western Australia has seen population growth well
above the national average and with this growth comes a number of first time buyers.”
While Western Australia in general has relatively low first time buyer saving times, Perth
presents a varied property marked, also encompassing a number of Australia’s most
expensive local government areas (LGAs). Peppermint Grove remains Australia’s most
expensive LGA and is the only location in Australia where it would take the average first time
buyer couple more than 20 years to save a 20 per cent deposit for a house. The deposit for
a house in Peppermint Grove is 54 per cent more expensive than the cost of a median value
house in Western Australia ($769,000 compared to $498,500).
Along with Sydney, Perth dominates the ultra-long saving times category in Australia,
containing six LGAs where it would take a couple more than 10 years to save a deposit.
Looking at Perth in general, however, a first time buyer couple would need to save $103,200
for a 20 per cent house deposit, which would take 3.9 years, considerably less time than in
Sydney or Melbourne.
“Western Australia is still a relatively prosperous state, with low unemployment in
comparison to the national average and strong wage growth compared to property price
increases,” Mr Rakhit said. “We see this play out at both ends of the property market. On the
one hand, we see a higher number of first time buyers after shorter periods of saving. On the
other hand, we see pockets of some of the most expensive properties in the nation.”
Nationally, first time buyers are being forced to save for longer as the median value of
houses outpaces salary growth. On average, Australian first time buyers will now take 4.1
years to save a 20 per cent deposit for a house, up from 3.9 years in 2013.
Despite a significant increase in the median price of housing across Australia, wages
amongst first time buyers have only grown by 2.6 per cent over the yearii, leaving first home
saver incomes lagging behind rising house prices.
A large part of the growth in national housing prices can be attributed to low interest rates,
with standard variable rates currently at the lowest level since 2009. The current average
rate of 5.9 per cent per annum is well below the average rate of 7.3 per cent seen over the
past 10 yearsiii.
While low interest rates may make it easier for home owners to service their loans, they can
also make it more difficult for first time home buyers to save for a first home deposit. For a
couple saving their money in a high interest online savings account, the average interest rate
has been 2.5 per cent over the past 12 months, down from 3.17 per cent in 2013, and the
average rate of 4.69 per cent over the past 10 yearsiv.
Additionally, investors comprised 47.1 per cent of all home loans over the last 12 months, up
from an average of 42.0 per cent over the past 10 yearsv, generating higher levels of
demand in the housing market which pushes prices up. Investor activity has been
particularly concentrated in New South Wales and Victoria; in New South Wales alone,
investor loan approvals have increased by about 90 per cent over the past two years.vi
“Certainly, today’s low interest rates make home loans more serviceable for young home
owners. But for most, saving a deposit for their first home remains the biggest challenge,” Mr
Rakhit said. “While interest rates are low, it’s important to develop a tailored plan that will
make the most of your savings each month. We encourage those planning to purchase their
first home to shop around to find the best savings plan for their needs.”
Overall, the downward trend in the number of first time home buyers continued this year,
with 80,018 buying their first home in the 12 months to June 2014, down 11.6 per cent from
90,553 in 2013. The current rate of first home purchases is also significantly lower than the
same point five years ago, when there were 162,679 first time home buyers in the year to
June 2009.
“A high rate of first home purchases in 2009 can in part be attributed to the fact that First
Home Owner Grants doubled in some states in 2008 and 2009,” Mr Rakhit said. “Looking at
a longer time-frame, the annual number first time home buyers is comparable to the same
period in 2004.”
Part of Bankwest’s Financial Indicator Series, the sixth annual Bankwest First Time Buyer
Deposit Report tracks the time it would take for first time buyers to save a deposit in 465
local government areas (LGAs) across Australia over the five years to June 2014. The report
quantifies how long it would take a first time buyer to save a 20 per cent deposit based on
local incomes and local house prices and the level of the First Home Owners Grant where
available by state. Data has been sourced from the Australian Bureau of Statistics (ABS)
Wage and Salary Earner Statistics for Small Areas, the ABS Wage Price Index, the Reserve
Bank of Australia (RBA) and Residex.
Deposit savings times have been calculated on the basis of a first time buyer couple setting
aside 20 per cent of their combined pre-tax income annually. The calculation assumes the
savings are deposited into an online savings account each month and earn interest on this
basis.
A full list of results for 465 LGAs across Australia is available in the Bankwest First Time
Buyer Deposit Report 2014, which is available at www.bankwest.com.au.
- ENDS Note: Tables can be found on the following pages
For more information contact:
Katherine Grima
Hill+Knowlton Strategies
(02) 9268 1259
0413 647 395
[email protected]
Russell Quinn
Bankwest Media Manager
0477 329 447
[email protected]
About Bankwest:
Bankwest provides personal and business banking solutions for more than 1.3 million retail and
business customers across Australia. Bankwest customers enjoy access to an extensive network of
stores and business centres, direct and third party distribution channels, agencies and electronic
banking facilities, as well as 24-hour telephone and internet banking. In 2013 & 2014 Bankwest was
named Business Bank of the Year in the AFR Smart Investor Blue Ribbon Awards. Bankwest is a
division of the Commonwealth Bank of Australia.
i
ABS 6345.0 Wage Price Index, Australia, June 2014
Ibid.
iii
RBA Indicator Lending Rates, August 2014
iv
Ibid.
v
ABS Cat 5 609.0 Housing Finance, Australia, July 2014
vi
RBA Submission to the Inquiry into Affordable Housing, February 2014
ii