MEDIA RELEASE
EMBARGOED UNTIL 12.01AM FRIDAY, 19 DECEMBER, 2014
South Australia leads the nation for first time home buyers
Stable house prices and increasing wages lead to speedy deposit savings
South Australia has seen the largest increase in the number of first time buyers over the past
year, with numbers strengthening by 16.3 per cent in the year to June 2014 to 7,369, from
6,337 in 2013. South Australia stands well above the national average, where a downward
trend in the number of first time home buyers saw a further drop of 11.6 per cent in 2014.
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
South Australia would need to save for 3.3 years to raise a 20 per cent deposit to buy a
house, well below the national average of 4.1 years. South Australia’s saving times remain
stable compared to 2013 (3.3 years), and down slightly compared to 2009 (3.4 years).
Deposit savings times for South Australian couples remained stable due to median house
values and wages for people aged 25-34 growing at similar rates in the past 12 months (3.2
per cent and 3.3 per cent respectively). However, homes have become relatively more
affordable in South Australia over the past five years due to wages growing at a faster rate
than median house values (18.5 per cent compared to 6.0 per cent) i.
“It’s likely that South Australia’s relatively modest population growth rate has had a
stablilising effect on saving times for first time buyers,” said Ian Rakhit, Bankwest Head of
Specialist Banking. “Compared to the national average of 1.7 per cent growth in 2012 to
2013, South Australia’s population grew by only 1.0 per cent.”
Compared to the nation’s average capital city property market, Adelaide offers the second
shortest savings time in Australia. First time buyer couples in Adelaide only need to save for
3.6 years in order to put a 20 per cent deposit on a median valued home, below the capital
city average of 4.4 years.
Consistent with this trend, a median value unit in Adelaide would take an average first time
buyer couple 2.7 years to save a 20 per cent deposit, offering the second shortest savings
time of all Australian capitals, and almost a full year shorter than the time taken to save a
house deposit in Adelaide (3.6 years).
“Considering Adelaide was recently named the word’s fifth most liveable city by the
Economist Intelligence Unit, it could be argued that property prices in Adelaide offer
considerably good value for first home buyers,” Mr Rakhit said.
Nationally, the Report found first time buyers are being forced to save longer for deposits 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 year, leaving first home
saver incomes lagging behind rising house pricesii.
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 yearsvi.
“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 5609.0 Housing Finance, Australia, July 2014
vi
RBA Submission to the Inquiry into Affordable Housing, February 2014
ii