How long does it take to save for a house deposit in Australia?

calculating house deposit

Chances are you’ve probably joked about never being able to afford a house with your friends, but have you actually sat down to crunch the numbers? We have.

According to our calculations, it will take Sydneysiders around 11 years to save for a 10% house deposit, and Melbournians close to 8. Yes, it’s a long time, but it’s not impossible. 

City Median House Price Deposit Required (10%) Expected Time to Save Deposit (Years)
Sydney $1,020,000 $102,000 11.1
Melbourne $713,000 $71,300 7.8
Brisbane $515,000 $51,500 5.6
Adelaide $452,000 $45,200 4.9
Perth $500,000 $50,000 5.5
Canberra $674,900 $67,490 7.4
Darwin $500,000 $50,000 5.5
Hobart $390,000 $39,000 4.3

How did we calculate this?

Because we can’t possibly accommodate for everyone’s specific situation, we used data from the 2016 Census to figure out the median house prices for Australian metropolitan cities and median national income (take home with an effective tax rate of 24%).

Our calculations also assumes that 15% of the net income is saved each year by an individual for a 10% house deposit. 

How can I save my house deposit faster?

If you’re planning to buy in less than three years, a high interest savings account is a reasonable option. But if you’re trying to grow your house deposit and you’re not planning to buy within that timeframe, consider investing it.

You need your money growing in value at a higher rate than inflation. And the only way that’s going to happen in the current low interest rate environment is if you embrace some amount of growth-oriented investments. So, if you keep your house deposit in a high interest savings account when you have a medium-term savings horizon (three to ten-plus years), you could be doing yourself a disservice.

things to think about before buying first home

Read our guide on how to save for your first home.

Where should I invest my house deposit?

A key factor to consider before investing is understanding your risk tolerance, that is, how much volatility you are willing to to tolerate with your investments. You’ll also need to consider when you’ll likely need the house deposit and how much time you’re willing to dedicate to managing your investment.

Exchange traded funds are a great option as they combine the accessibility and transparency of shares, and the diversification of a managed fund.

Here at Clover, we provide our clients with financial advice from real humans and manage their investments for them in diversified portfolios. Because we are backed by robo-advice technology, we can charge lower fees than traditional managed funds. Learn more about our investment approach and why we’re Australia’s friendliest automated savings platform.

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Also published on Medium.