Sydneysiders face an unprecedented decade-long wait to save a deposit for a new home as desperate house hunters make extraordinary sacrifices to enter the property market.
Prospective buyers are cutting back on their lifestyles, abandoning holidays, delaying having children, taking a second job and even moving back in with parents to make saving for a home easier.
According to new research from Compare the Market, more than half (55 per cent) of hopeful buyers in NSW have cut back on travel and leisure to help save for a deposit, while one in 10 have put their dreams of having kids on hold.
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Couples on an average combined salary of around $145,600 could afford to unlock properties in 135 suburbs in the Greater Sydney area
The Compare the Market Household Budget Barometer report found that at least half of aspiring buyers would need support from their parents to get into a home.
The report also revealed the suburbs in Sydney, homebuyers should target if they want to get into a home sooner.
Couples on an average combined salary of around $145,600 could afford to unlock properties in 135 suburbs in the Greater Sydney area, including units in West Ryde, Bankstown and Enfield.
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Andrew Winter. Image: Luke Marsden.
Compare the Market property expert Andrew Winter said one in five Aussies had also picked up a side hustle and five per cent had taken on a second job to grow their savings faster.
Mr Winter said raising a deposit is just one hurdle. With new buyers facing bigger loans and larger mortgage repayments that could mean the pain that once came with raising a 20 per cent deposit is instead spread over the life of the loan, as homeowners have to grapple with greater interest repayments.
“A 20 per cent deposit for a median home of around $940,000 in our capitals would be $188,000,” he said.
“For many people, it could take close to decade – potentially more – to reach that goal and by then property prices would have climbed even further out of reach.”
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Bankstown was among the Sydney suburbs more affordable for struggling homebuyers
Mr Winter said for around a third of homeseekers there aren’t enough properties for sale where they actually want to live.
“Obviously getting into the market often means compromise, but if you’re spending hours on congested roads getting to and from work, it’s entirely understandable that many young buyers are reluctant to live on the city fringes,” he said.
“So, while the government has these ambitious building targets, it’s really crucial that we’re not just developing houses in the far-flung reaches of our cities.
“A mix of medium- to high-density builds will be really crucial to ensure people can afford to buy where they want to live and work.”
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Mark Ferguson. Image: Thomas Annetts
Waterloo resident Mark Ferguson recently purchased an investment property in Melbourne, where he said the market is much softer and less challenging than Sydney.
“I was looking at buying with my partner and we were looking at houses in Sydney and for our budget we would have had to have gone so far out,” he said.
“We both work in the CBD so a commute over one hour was not feasible for us. We ruled that out and looked at other options.”
Ferguson said he was looking at buying in central Sydney, the inner west and east but all locations were out of budget with the borrowing capacity he had.
“The banks will tell you how much you can borrow and you look at what that buys you and it’s just not aligned with what you need to live in,” he said.
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Mr Ferguson purchased an investment property in Melbourne where it was cheaper than Sydney. Image: Thomas Annetts
Ferguson said the help of a good mortgage broker really helped him through the rentvesting process – where buyers purchase where they can afford to, in order to get a foot on the property door, rather than where they want to live.
“I’ve always been really lucky, I have had really proactive brokers at the banks who can talk you through their options and come up with different ways to get things done,” he said.
“It’s definitely worth asking them lots of questions, asking about possibilities, what different things they can do to try and get you in a situation that works for you.”
Ferguson said the plan is to hold on the property for as long as he can.
“Obviously if circumstances in life change I will reassess, but I always plan for the long term,” he said.
He offered some advice for buyers navigating the restrictive market.
“Try to be as flexible as possible, look at options you might not have considered, because if you can find something that works and find a way to get a foot on the ladder it gets easier after that,” he said.
Suburbs with some of the most affordable repayments on units included:
Carramar (NSW)
Fairfield (NSW)
Warwick Farm
Cabramatta
Liverpool
Canley Vale
Mount Druitt
Regents Park (NSW)
Merrylands West
Wyong
Source: The Compare the Market
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