Having examined median deposit amounts and compared differences by state, region, property type and property value, the latest PEXA report finds Australians having to work at least two years more to save for a deposit than they did in 2020.

First home buyers in NSW are bearing the brunt of the pain, where it’s now taking up to 8 years (94 months) to save for a deposit, compared to just over 4 years in 2020 (up 83.2%).

In Victoria, it’s taking 5.5 years to save for a deposit, compared to just over 3 years in 2020 (up 64.2%), while in Qld it now takes more than 5 years compared to less than 4 years in early 2021 (up 36.9%).

DVRs have increased

Deposit-to-value ratios (DVR) have also increased to around 20% across all eastern states.

Across the three states, the difference in DVRs is more marked between different price bands with DVRs of 16-18% in the more affordable property band (sub $500,000) compared to DVRs of 27-30% in the premium end of the market ($2m plus price band).

 

LVRs trending downwards

With average loan-to-value ratios (LVR) peaking at around 83% at the end of 2020 during the onset of the covid pandemic, homebuyers only needed to put down a deposit of around 17%.

However, PEXA’s latest research reveals that as lenders have tightened credit standards in response to increased interest rates, LVRs have trended downwards, hence increasing the deposits required.

“LVRs were higher in the lower end of the market reflecting first home buyers purchasing more affordable properties with limited means, with a higher proportion relying on lenders mortgage insurance,” said PEXA’s head of research Mike Gill.

“We found LVRs were higher among the major banks compared to non-major lenders, which suggests that the major banks are more open to lower deposit borrowers due to their visibility of borrower’s income and expenditure via existing banking relationships.

Median deposit

The FY23 median home deposit for these three states is now:

  • $119,969 in NSW ($145,000 in Sydney).
  • $84,723 in Victoria ($94,000 in Melbourne).
  • $78,143 in Queensland ($85,163 in Brisbane).

Other Key findings within PEXA research include:

  • Total value of deposits amounted to $62.2bn across the eastern states comprised of $27.2bn in NSW, $20bn in Vic and $15bn in Qld.
  • Lenders mortgage insurance was used in more than half of purchases across all three states, down 3% to 53.4% in NSW, down 2.6% to 56.5% in Vic, and down 4.1% to 54.1% in Qld.
  • Deposit-to-value ratios (DVRs) increased 1% to 20.4% in NSW, increased 0.8% to 19.5% in Vic and increased 1.5% to 19.8% in Qld from FY22 to FY23.
  • Deposit-to-value ratios by property value were lowest in the sub-$500,000 price range band and increased as the value of the property increased across all three states.
  • Loan-to-value ratios were higher among major lenders compared to the non-major lenders at 81.2% versus 76.2% in NSW, 81.9% versus 77.5% in Vic and 81.9% versus 77.6% in Qld.