The amount of money first-home buyers are required to save for a house deposit has soared drastically across every major city in .
While deposits have increased in some cities by tens-of-thousands of dollars, a 20 per cent deposit for a median-priced home in Sydney has jumped by $125,424 in the last five years.
New data from Domain showed buyers now need to save $332,000 – compared to $207,066 in June 2019.
Meanwhile, the amount needed for a median priced house in Melbourne has climbed from $165,212 to $213,761.
Compare the Market economic director David Koch warned the growing deposit could see young ns priced out of the property market.
‘With property prices climbing tens of thousands of dollars in some parts of the country, a lot of buyers feel that they are falling behind while trying to save that 20 per cent deposit,’ he told Yahoo.
Brisbane had the second-highest recommended deposit increase by $81,498 to $195,293.
That was followed by Adelaide at $78,563 to $186,994, Perth up $64,313 to $170,000, Canberra up $58,143 to $208,286, Hobart up $41,039 to $137,211 and Darwin up $12,012 to $117,009.
The median price of a house in Sydney had risen to $1,662,448 compared to $1,068,805 in Melbourne and $976,464 in Brisbane.
While it is recommended first home buyers save a 20 per cent deposit, lenders can accept as low as per cent deposits.
However, those borrowing with a low deposit are required to pay lenders mortgage insurance (LMI)
LMI is a one-off, non-refundable fee which helps protect lenders in the case someone is unable to repay their loan.
Better yet, the government’s First Home Guarantee allows it to be a buyer’s guarantor, meaning the buyer can avoid LMI.
Some lenders may also forgo LMI for some high-earning customers, like doctors or lawyers, or offer a $1 LMI.
Koch urged buyers to consider the financial burden of an LMI, which can be tens-of-thousands of dollars, before quickly signing up.
‘But is LMI still a dirty word? If owning a home is part of your long-term plan, and you are confident you can meet the repayments, you could still reap the rewards in equity if the value of the property increases enough before you decide to sell it,’ he said.