Amid rising rents, low vacancy rates, and a projected shortfall of 257,000 homes over the next five years, Australia’s housing market is under increasing pressure, according to Mortgage Brokers AU.
Since 2020, rents have risen by 35%, intensifying the challenge for prospective home buyers.
Despite these challenges, mortgage experts at Mortgage Brokers AU have analysed Australia’s capital cities to determine the most achievable locations for saving a home deposit, factoring in rent prices, average incomes, savings potential, and living costs.
Perth stands out as the most affordable capital city for saving a home deposit, earning an affordability score of 8.56/10.
With an average weekly salary of $2,108 and rent taking up only 30.85% of income, Perth residents benefit from the highest wages and one of the lowest rent-to-income ratios in the country.
The city’s housing market remains robust, with 40.5% of residents holding mortgages.
Perth also offers relatively low living costs, such as $160 per month for public transport, allowing residents to save $82 monthly – 12% more than Melbourne.
Melbourne ranks second with a score of 7.75/10, featuring a slightly lower average rent of $580 per month but offset by a lower weekly salary of $1,858.
The rent-to-income ratio is 31.2%, leaving residents with about $73 in monthly savings.
Known for its cultural vibrancy, Melbourne remains attractive for homebuyers, though savings are slightly more difficult to accumulate compared to Perth.
Hobart, known for its harbour and historical charm, ranks third with a score of 7.38/10.
While rent is the lowest on the list at $540, the city’s average salary is also lower at $1,670.
Despite this, Hobart's affordable public transport costs – just $86.23 per month – make it a better option for savings compared to more expensive cities like Sydney.
However, monthly savings in Hobart are modest at $65, which is 23% less than in Canberra.
Brisbane ranks lowest, making it the most difficult capital city for saving a home deposit, with an affordability score of 5.77/10.
Although rent is relatively low at $630 per month, it consumes 34.15% of the average income. Combined with high public transport costs of $197.35 per month, residents can only save around $72 per month, making it the most challenging city for prospective home buyers.
Shaun McGowan, CEO of Mortgage Brokers AU, highlighted the varying levels of housing affordability across Australian cities, noting that Perth stands out as the most favourable for saving towards a house deposit.
McGowan advised prospective home buyers to create detailed budgets, cut non-essential spending, and explore additional income streams to boost their savings. He also suggested that, while relocating to a more affordable city may be an option for some, it comes with challenges.
“Saving requires discipline and effort, but implementing these strategies can significantly improve a buyer’s savings potential and bring them closer to owning their own home,” McGowan said.
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