First-home buyers can enter the property market nearly two years faster by purchasing a unit instead of a house, according to a new Domain report. The time needed to save for a house deposit has increased, while saving for a unit deposit has become quicker across most capital cities.
The report compared entry-priced houses and units, defined as those in the 25th percentile. It found that the average time to save for a unit deposit dropped by almost two months by the end of 2024 compared to a year earlier, while the time to save for a house deposit increased by one month. The difference is most pronounced in Sydney and Canberra.
Melbourne is the only capital city where the time to save for both entry-priced houses and units has decreased over the past five years. Unit prices in Melbourne fell by $12,500 (2.8%) to an average entry price of $437,500. In contrast, Perth remains the cheapest city for units at $410,000, though prices have surged 54.7% since December 2019. Adelaide saw the steepest climb in unit prices, rising 78.1% over five years to $463,000.
Domain's chief of research, Nicola Powell, noted that entry house prices have increased 58% over five years, while unit prices rose 27%. Inflation surged 20% and wages grew only 15% in the same period. Dr Powell highlighted that some regions are becoming more affordable, with Sydney seeing a 15-month reduction in saving time for entry-level units compared to five years ago, thanks to higher wages and better savings rates.
Mortgage stress is worsening for existing homeowners, defined as paying more than 30% of household income on repayments. In 2019, only Sydney and Melbourne saw mortgage stress among young couples owning houses; now, unit owners in Sydney, Brisbane, and Adelaide also face stress. Sydney remains the most expensive city, with owners paying 57.6% of income on mortgages, followed by Canberra at 46.7%.
Dr Powell said the recent Reserve Bank rate cut offers some relief but noted rates remain high. The proportion of income needed for an entry-priced house across combined capitals is 19 percentage points higher than five years ago, while units have risen by about 8 percentage points.
