Saving for a Home? Aussie Capitals Where You Can Save for House Deposit Quickest

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Amid a landscape of rising rents (35% rise since 2020), low vacancy rates, inadequate housing supply, and a projected shortfall of 257,000 new homes in the next five years – Australia’s housing crisis is placing increasing pressure on both renters and homebuyers. 

In light of this, the mortgage experts at MortgageBroker.com.au have explored capital cities in Australia where saving for a home deposit is the most achievable. Their analysis evaluated key metrics such as rent prices, average incomes, monthly savings, and overall living costs to reveal the best cities for prospective homebuyers.

Key findings:

• Perth has the highest average weekly salary at $2,108 and the lowest rent-to-income ratio of 30.85%, making it the easiest capital city to save for a house deposit
• High living and transport costs in Brisbane make it the toughest capital city for saving a house deposit
• Darwin’s rent-to-income ratio is the highest at 36%, meaning residents spend the largest portion of their income on rent
• Hobart residents have the lowest monthly savings, based on 0.9% of their disposable income, at $65.
  

Which Australian capital cities can save for a house deposit the quickest?

Perth residents can save for a house deposit the quickest

Perth is Australia’s most affordable capital city to save for a house deposit, with an affordability score of 8.56/10. With an average weekly rent of $650 and the highest weekly salary at $2,108, Perth residents benefit from incomes 20% higher than those in neighbouring Adelaide ($1,735), despite similar rent prices ($595).

With 40.5% of residents already holding mortgages, Perth’s strong housing market is supported by reasonable living costs, including a relatively low monthly public transport expense of $160. Rent takes up just 30.85% of weekly income, the lowest of all cities analysed, making it easier for locals to build up their savings. Perth and Melbourne have a comparable rent-to-salary ratio, however, Perth’s higher wages give the city the edge — allowing residents to save $82 per month — 12% more than in Melbourne ($73).

Known for its arts, culture, and thriving culinary scene, Melbourne ranks second with an affordability score of 7.75/10. Rent is 11% cheaper than in Perth at $580 per week, but this is offset by a 13% lower average weekly salary of $1,858.  The city, where 35.6% of residents already hold mortgages, offers a balanced yet bustling urban lifestyle, with slightly higher monthly public transport costs of $164. With rent consuming 31.2% of the average income, residents have less room for savings, managing around $73 per month based on 1% of their disposable income.

Hobart, with its scenic harbour and historical charm, ranks third in the analysis with an affordability score of 7.38/10. The average rent in Hobart is lower at $540, the lowest on the list, but this is balanced by the city’s lower average salary of $1,670. Despite this, Hobart’s smaller size and lower public transport costs of $86.23 per month make it more affordable than cities like Sydney, where public transport costs up to 80% more on average ($200.20). Rent consumes 32.35% of the weekly income in Hobart, leaving residents able to save just $65 a month, which is 23% less than Canberra ($82).

Brisbane’s residents will have to save for the longest to afford a property deposit

Brisbane ranks lowest on the list, making it the most challenging Australian capital city for saving a house deposit, with an affordability score of 5.77 out of 10. Despite a relatively lower rent of $630 and a weekly salary of $1,845, rent consumes 34.15% of the average income. This leaves residents with monthly savings of just $72, based on 1% of their disposable income. Public transport costs are notably high, at $197.35 per month, further squeezing disposable income. While saving for a deposit might take a bit longer, the lifestyle and amenities offered by Brisbane provide a compelling reason to call it home.

Shaun McGowan, CEO of MortgageBroker.com.au, shares his tips for aspiring homeowners:

“The results highlight significant differences in housing affordability across Australian cities, with Perth being the most favourable for saving towards a house deposit. These insights come during a challenging period for homebuyers, with rents rising 35% since 2020 and a severe shortage of new homes making market entry increasingly difficult.

To boost your savings, start by creating a detailed budget and tracking your expenses. Identifying areas to cut back and exploring additional income sources, such as side jobs, can make a difference. Reducing non-essential spending like dining out will also help.

If feasible, relocating to a more affordable city could accelerate your savings, though it involves its challenges. Additionally, setting up automatic transfers to a dedicated savings account and using financial planning tools or consulting with an advisor can provide crucial support. While these steps require effort, they can enhance your savings potential and bring you closer to homeownership.

Despite the current challenges in the housing market, implementing these strategies offers a practical approach to improving your savings potential. By creating a disciplined savings plan and making informed financial decisions, you can navigate the high living costs and competitive market, ultimately getting closer to securing a place to call your own.”

Please find the full dataset here including all the metrics used to calculate the overall rankings.