Canberra is an expensive city in which to buy a house, but it's taking less time to save a deposit

It’s mixed news for first-home buyers trying to enter the property market in Canberra with new data suggesting it now takes less time to save for a house but longer to save for a unit.

The 2024 Domain First-Home Buyer Report, released on Thursday, revealed a four-month drop in the time it takes for a couple aged between 25 and 34 to save for a 20 per cent deposit on an entry-priced house in the capital compared to last year.

Savings for this age cohort have been helped along by wage growth and the higher compounding interest accrued on those savings, which is keeping ahead of the growth in entry-level house and unit prices nationally.

However, buyers are still looking at a lengthy saving period of about five years and nine months since the median entry price for Canberra houses sits at $800,000, remaining unchanged year-on-year.

First-home buyers who buy a unit instead of a house could save themselves about two years and two months, even though it now takes about one month more to save for a deposit compared to last year, according to the report.

Canberran Surojit Samanta, who recently moved into his first home in Taylor, said he was determined to buy a free-standing house.

“Initially I was very picky about certain suburbs which I didn’t want to go to, but as property prices grew, my choices became limited and I really didn’t have the bargaining power to choose between suburbs,” he said.

“It was also very competitive when I was searching for a property. I wasn’t earning enough so I didn’t have enough borrowing capacity to fulfil my needs.

“I was also competing against high-earning professionals who were willing to match the amount asked from the seller as they had the borrowing capacity that I didn’t. I had to find innovative ways to enter the housing market.”

Samanta began to look instead at buying a townhouse or apartment.  

The median entry price for a unit in the nation’s capital sat at $485,000 in the three months to December 2023, up from $450,000 at the same time in 2022.

But Samanta said despite a unit being more affordable, he didn’t want to give up his dream of owning a house after so many years of saving.

“After a certain point, the property prices were so high in the ACT that I didn’t mind any location,” he said. “I just wanted to enter the housing market regardless of where I could afford.

“I kept my patience and when I saw this property come up, I entered into a ballot. I was lucky enough to get selected and build the property.”

It’s not just high deposits that affect people’s ability to buy their first home.

According to the report, many cities, including Canberra, have fallen into mortgage stress – when more than 30 per cent of an income is required to cover a home loan repayment. For entry-priced homes in the capital, it requires 48.3 per cent of a person’s income to service a loan.

“Canberra is the second most expensive capital city for first-time buyers, which means more debt to enter the property market, heightening vulnerability to high interest rates and, of course, the slash to borrowing capacity,” explained Domain chief of research and economics, Dr Nicola Powell.

“Canberra first-time buyers are supported by the highest average wage of all the capitals, helping to somewhat offset the higher purchasing price. However, it is a tale of property types that unravels this bucking trend, with unit prices jumping almost 8 per cent annually – a challenge even for the higher wages to keep up with – while entry house prices remained stable, ultimately making that savings goal a little easier to reach.”

Entry-priced houses in Canberra require 48.3 per cent of an income to go towards mortgage repayments compared to Sydney’s 57.2 per cent.

Canberra’s units are a better option in this regard, but only just exist below the mortgage stress threshold of 29.3 per cent of income.