Units provide faster path to first-time home ownership than houses

First-time homebuyers aiming to break into Australia’s property market can save for a unit deposit nearly two years quicker than for a house, according to the latest Domain First Home Buyer Report.

The report indicates that a typical couple aged between 24 and 35, earning average wages, would take approximately 20 months less to save for a 20% deposit on an entry-level unit compared to a house.

Currently, the average savings period for a house deposit across Australia’s capital cities is five years and one month, marking an increase of one month from the previous year. By comparison, saving for a unit deposit averages three years and five months, which is two months quicker than last year.

Domain’s chief economist, Dr Nicola Powell, noted that the gap between property prices and wage growth continues to widen, presenting significant challenges for first-time buyers.

“Over the past five years, entry-level house prices rose by 58%, while units increased by 27%. Meanwhile, inflation jumped 20% and wages only grew 15%, highlighting how affordability continues to decline,” Powell explained.

Sydney remains the most challenging market for first-time buyers, requiring nearly seven years (six years and nine months) to save for a house deposit and over four years (four years and four months) for a unit deposit. Even the fastest-saving suburbs in Sydney, Wyong and Wollondilly, require longer than the national average.

However, unit savings times in Sydney have improved significantly, becoming 15 months shorter than five years ago, driven by rising wages, better savings interest rates, and more stable unit prices.

In contrast, Brisbane, Adelaide, and Perth experienced longer saving times for both houses and units, mainly due to property price growth outpacing wages.

Melbourne stands out positively, as the only city where the saving period for both houses and units decreased over the past five years, contributing to Victoria’s strong participation rate among first home buyers.

Darwin continues to offer the shortest saving periods nationally, with just three years and five months required for houses and two years and one month for units—half the time compared to Sydney.

Powell stressed the importance of government intervention to address affordability and housing supply shortages. She praised initiatives like the National Housing Accord, aimed at constructing 1.2 million homes within five years, but urged coordinated efforts across all government levels.

“Unified action by government and industry is essential to ensure Australians have access to affordable housing,” Powell concluded.