Due to a high cost of living, mortgage brokers and financial planners in Perth are often asked by potential first home buyers how to save up for a deposit on a home. The next question is usually “how long will it take?” The answer, of course, is dependent on how much money you can put away every month.
We are going to base our computations on the ABS 2011 Census data for Perth and REIWA data for average housing prices. We are using a calculator provided by HSBC Australia.
The Averages
The median weekly household income for Perth residents in 2011 was $1,709. The median home price in Perth is $520,000. In the suburbs, the lowest median price is $340,000 in Lockridge. For a first home buyer saving for a deposit, we will consider the high end irrelevant, at least for now.
Since the rule of thumb is that it takes 10% of the home price as a deposit, that means you would need $34,000 for a home in Lockridge and $52,000 for a home in Perth.
Interest varies from situation to situation, but we are going to use the current HSBC rate of 2.9%. Remember that this is a low end number and that you can often find higher rates in various savings plans. HSBC actually gives you 4.25% as an introductory rate for the first four months of your account, but their online calculator isn’t sophisticated enough to crunch those numbers.
How Long will it Take?
First of all, if you are serious about buying a house, we recommend putting away at least $1,000 every month and would hope you can somehow find $2,000. As you can see here, it will add up and every dollar counts.
If you save $1,000 a month, it would take 34 months to save enough for a deposit on the median home in Lockridge and 50 months for the median home in Perth. $2,000 a month will get you a deposit in Lockridge in 18 months and enough for Perth in 26 months.
Start Saving Now
Call (08) 9472 9766 today to talk to one of our financial planners in Perth. We can help you make saving for a home easier than you think.