The findings from Canstar’s latest research disclose a troubling decline in monthly savings among young homebuyers. On average, individuals stashing away funds for their first property now save $881 less each month compared to last year, indicating a stark decrease in their capacity to amass a home deposit.
A significant survey was carried out through the Canstar First Home Buyer Survey 2024, encompassing nearly 1000 prospective homebuyers. The analysis reveals that participants, who managed to save $1605 monthly in 2023, are currently accumulating only $724 each month towards purchasing their first home. In comparison, the 2022 monthly savings rate was $1417.
This considerable reduction is causing future homeowners to face up to four more years in saving for a deposit behind schedule, especially for purchasing an apartment at the median price point.
According to Sally Tindall, Canstar’s data insights director, this plummet in savings rates remains a pressing issue. “To see savings more than halve each month is a huge hit to anyone’s goals,” Ms. Tindall warned.
Furthermore, significant elements such as household bills and rising rent contribute primarily to the savings dip, with 56% of survey respondents attributing their limited savings to these factors.
The Australian Bureau of Statistics recently reported on inflation’s steady footprint on everyday costs. They documented annual rental increases of 6.7%, insurance surges of 14%, and food costs climbing by 3.3%. Such costs have compounded the difficulties that first-time buyers now experience.
Interestingly, while the national statistics paint one picture, anecdotal evidence suggests renters are facing steeper hikes. Ms. Tindall noted, “In some cases, people have seen a rental increase of $100 more a week. That accounts for half of that drop.”
This ongoing financial strain marks a greater challenge for younger generations navigating the current housing market, as significantly realized in the 2024 Scanlon Mapping Social Cohesion Report. A poignant 61% of renters described themselves as “poor” and “struggling to pay bills,” setting a stark backdrop for housing affordability.
Beyond essentials, some surveyed individuals confessed to spending on non-essentials, including dining, online shopping, and subscription services, which impede their saving goals.
Nevertheless, Ms. Tindall suggested practical measures for hopeful buyers, including regularly reviewing expenses and hunting for better deals in various contracts and services.
Tindall advises reviewing supermarket brands, shifting to better Internet and mobile plans, or cancelling unnecessary subscriptions as cost-saving strategies. “The average person could potentially save up to $1000 a year on car insurance by switching from an average priced comprehensive premium to one of Canstar’s five-star rated policies.”
The recommendations in the report could prove valuable in bolstering savings for potential home buyers, alleviating the burden imposed by rising essential costs and discretionary expenses.
