How long will it take you to buy a house?

I bought my first home a year and a bit ago, I’d been saving regularly ever since I started working full time and had bought a car (with a small loan), paid off my HECS and was living in a crummy little unit in a noisy area where the rent barely increased.

I suppose I was saving properly for a house for about a year and a half before I bought, with the last 6 months I decided to simulate paying off a mortgage with a high interest rate to see if I could do it, so I budgeted and put as much money as possible into savings as my ‘mortgage payment’.

Then when I bought my house I set myself a limit and although I bought at the top of that limit I didn’t go over. My contribution was about 12% of the purchase price, plus I got $18,000 in FHOG from the State and Federal Gov which wiped out the fees and left me a couple of grand extra for the house.

I guess I was lucky that my rent barely increased in 6 years of renting so I was able to increase my savings whenever my pay went up. That unit was pretty horrible to live in though but it was a sacrifice to get the awesome house I have now.

I also continue to live to a budget and pay extra into the mortgage every week, so if things go pear shaped later in life I have some extra payments to fall back on, or I just pay the house off earlier.

In my younger days when I had time on my side to save for a house, I wasn’t interested.  My money was better spent on partying and having fun (or so I thought).  Now that I’m at the age (44) when having a house of my own is a great idea, I don’t have anywhere near the money I need and I would have to save rigorously for God alone knows how many years to get one.  Low wage jobs and single parenthood were never conducive to being able to save.

By the time I would have managed to save a decent deposit, the banks would never give me a mortgage because I’d be too old and I don’t really fancy being in massive debt until the day I die.  Plus in my crazy younger years I totally trashed my credit rating and I’ve been too scared ever since to find out what I’d need to do to repair it.

Debt really scares me so avoidance is the best course of action.

Justine
This is a really vexed issue for me but also for the whole country. Fortunately I already own a house, so while I am better off than many its still not ideal.
When I bought my house I paid about 3.5 times my then gross earnings. My house is now worth about 5.5 times my gross earnings - in spite of the fact I have an additional qualification and my earnings have increased by 2.5 times.
The house I own is a 3x1 - when we first bought it we were a couple with a baby. Now we are a couple with 4 children. While it was a good starter house, we always knew we’d eventually need to move. The problem is that every house has increased in value - so trading over is not easy plus you lose the stamp duty portion which nowadays is a significant sum.
Also, as a family with young children we want a yard to play in. Nowadays you have a huge house on a postage stamp block with just enough room for an alfresco area and a clothes line if you’re lucky.
We have really created a monster for ourselves and I worry that my children will never be able to buy a house.

We bought a unit a little over 2 years ago.  When we bought, the banks were handing out loans and cash, so we didn’t need much of a deposit.  We were approved for double what we actually ended up using.  Which was hard to do, when everyone around us was signing their lives away.  I think it’s only because we are cautious that this has worked out for us.  When interest rates went up, we knew we could ride it through, and we have continued to pay off extra on our loan.  I think this has worked well for us because we bought a modest home with a modest mortgage.

Our first property was a 2 bedroom 2 bath unit that we bought a little over 3 years ago.  We saved for about a year and a half for the deposit and did quite a bit of research regarding mortgages etc.  What amazed us at the time was how flippant some of our friends were when purchasing their massive first properties.  This was at the time that you could get 105% mortgages (i.e. you didn’t need a deposit and could capitalise the stamp duty etc).  Because some of these friends did not feel the ‘pain’ of saving for a deposit they had no concept when negotiating that each $5K increment was $5K they had to pay back. The whole thing seemed a bit unreal.
As a result of this I have never regretted even $1 of the deposit that we saved so hard for; it actually made us better negotiators when purchasing

I bought my unit last year and got in just before the banks started wanting deposits, however I did have a 5% deposit and enough left over cash to pay for the stamp duties etc AND a new kitchen.

I guess you could say it took me 20 years to save that since my deposit was shares I bought as an 18yo.

I have to agree with you about changing expectations. My mother was raised in a 2 bedroom 1 bathroom house with 2 sisters and a brother and at one point a grandmother as well. The parents got the master bedroom, the 3 girls (& grandmother) shared the second bedroom (10 yr age difference between youngest and eldest) and the boy got the drafty sleepout. This was the 1960’s and it was normal.

Wind the clock forward 50 years and if you suggested to most current home buyers that siblings that arent same sex twins would share a bedroom you would probably get looks of shock at the mere thought. So a family this size has gone from a 2 bdr 1 bath house to a 5 bedroom, 2+bath house and no-one blinks an eye at it.

The big question is if kids just 50 years ago could share a room what is wrong with todays kids that they each need their own rooms? Additionally are parents doing kids no favours by doing so as they are not learning to compromise and share to the same extent with their siblings?

Considering that my husband is in the ADF, we have access to Defence Housing which is a lot cheaper than renting or a mortgage, let’s just say a 4 bedroom, 2 bathroom house can be around $200 a week. Therefore we save a lot, in a high interest account, and will continue to do so until my husband decides the ADF is no longer for him.

When this happens, we will have more than enough for a deposit and both of us will be in full time employment, so we will be able to afford to mortgage payments; hopefully greatly lowered by the large deposit we shall have.

That’s easy… on my salary with my rent and the other repayments I have there’s no point saving with a house in mind (I save but with smaller goals) as it will take me 20 years just to save a deposit! If I want to save for a 1 or 2 bedroom flat in say Penrith area then maybe I can save in 8-10 years. It’s a pity really :(

(I’m single, 29, take home ~$3k a month, Pay $1300 in rent, have a personal loan, a car, a small amount of credit card debt...I’m not frivolous in my spending but there’s just not a lot leftover!)

We bought our first home in October 2008 (we signed the contract the day the PM announced doubling the grant - can’t believe we got an extra $7000 and put it straight on the mortgage).

I had been saving half the money I earned from my holiday job since starting uni - so 2002, and my husband started saving like mad when he entered the workforce.  When I started full time work we lived on my income and saved his. 

In a sense, I’d been saving for 6 years, my husband had been saving for 3 years, and together we saved for 18 months. 

It looks impossible.  We thought it was impossible.  But I tell anyone who is worried about being able to buy to just start saving and see where it takes you.  It does add up, no not overnight, but you’ll get there in the end.

I’m glad someone has noticed the increasing house size Justine.  We dont have a housing bubble, we have rising expectations as you say.  Want to make places affordable, make them smaller, which will make them cheaper.

How much is enough deposit?  Whatever the bank wants.  When I’m talking to friends and family, one of the things I suggest is to put the minimal amount your comfortable with as a deposit.  After that, fill out your house with basics, then dump the rest down as your first months payment.

$10,000 can save 4 years off the loan, and $120k in interest over a 30 yr loan.  Big step forwards, and if you have redraw its still there for worst case situations.

Hopefully I tell my story and inspire someone.In 2002 I decided to buy a house.I worked 12 hours a day in a factory,slept on a floor in someones house,drove a $1000 car.After 6 months with the fhog I had the 20% deposit for a 2 bedroom townhouse in arguably the worst street in Sydney.Since then traded up a couple of times and now have $600000 apartment in CBD.Not bad for 6 months hard work.Put your mind to it and you can do it.Just give it a go and dont be afraid to start small or in a place you hate to live.Can always change location later.

My partner and I are looking to buy our first home. The only prob is we only get paid $65,000.00 total for 2 full-time jobs. Luckly at the end of the year we are able to move into a grannyflat on my familys property and have worked out that we can save $250.00 a week each (half of our pay) leaving the other half to pay for insurance - health and car, groceries, petrol etc.. We know that by doing this we can save $26,000.00 in a year and considering that we only need $15,000.00 for a deposit (5% + Stamp - first home buyers) So the fun part is now to pay as much off our current loans and then start saving. Oh I should add that the houses we are looking at buying are under $180,000.00 (in our town this means 3bedroom, 1 bath built 20years ago)

I managed to build a house while on a single income. In 2007 I was on about 70k. I made the last repayment my car loan on my 24th birthday, then I started saving 1k a fortnight while paying $100 a week in a share house. I found that if you’re on your own you really don’t need that much money to live on. By the end of the year I had 20k and the gov was going to give 21k for new constructions. I bought a great block in springfield lakes in Jan 2008. It wasn’t registered until June08 and I had 18 months after that to build the house. I kept paying the land loan down with the amount I expected to pay once the construction was done - about 1200 a ft. So over 2008 I’d paid about 20k off it after interest and then started looking for a builder in 2009. Got it built by Sep 09. I spent 190k on the land and $270k on the house which is more than what most people need, but my block and house are great and will increase in value a lot once they build the train line out there. There’s also a uni nearby and a hospital and schools getting built. I’m really glad I’ve made this investment before having kids. I think the key is to look ahead, plan and set goals.  The downside is that other people my age are partying and taking overseas holidays, etc which I haven’t managed to do yet.
I think most people can borrow 90% of the loan, but will have to pay Lenders mortgage insurance.

My boyfriend (24) and I (23) have been saving up for the last year and a half (uni grads). Together we currently have 60k. However, given the prices of houses in Perth we will need to keep saving until we have about 100k.

It’s difficult saving, as many of our friends are going on long trips overseas, but we fear if we do not save, house prices will continue to go up and we’ll be forced to buy in outer outer suburbs.

The next difficult part is knowing when to buy!

In my experience, if you are lucky enough to have supporting parents, stay with them whilst saving for your first deposit or paying off mortgage faster. When my wife & I bought our house, we rented it out for several years. The income from our jobs + rents pay off the mortgage real fast. Whilst living with my parents we helped out a lot including paying the bills. You don’t have to be a responsible person living away from home. We also postponed having child. 8 years later, we are now living in our home with a child and mortgage paid off. Things are less stressful now. It’s all about priority.

My partner and I bought our first home and our subsequent investment property with no deposit. I was fortunate enough to have a parental guarantee.

In order to afford our two mortgages we work in the mining industry, I live in a different town and travel home on weekends. My partenr lives in our house with a flatmate and we also have a caravaner parked out the back who pays rent for the space and use of our detatched laundry/bathroom.

Sometimes you need to be a bit creative.

We are looking at buying a few more years down the track. We’re both young (under 25) and have been married 2 years - hubbie has worked fulltime for 3.5 years and I’ve worked fulltime for 1 (broken up over the past 2.5 years - short term contracts.)

We are living off his income and all of my income goes straight into savings (except when we have big expenses - like root canal surgery - where we have to dip into savings).

We are looking to do an overseas trip next year and recognise this will put us back in regards to saving for a house, but we want to do this trip before kids as it will be much cheaper and easier to do it without children - and we want to start having kids ‘young’ (ie. before 30), so it’s not like we have another 12 years to sit around saving money. So we figure do the trip now while exchange rate is good (hopefully it stays good for another 12 months!) then continue with the saving for another few years for the house, before buying then having kids another few years later.

(We also won’t be spending anywhere near the full amount we’ve saved on the holiday).

I’m also reasonably confident that the Australian housing bubble will burst in the next few years or so. Particularly in the regional city where I live, there are SO many houses going up supply will have to start outstripping demand soon enough, considering how few people can actually afford a house these days. If you look at other developed countries, their housing is nowhere near as expensive as ours (relative to income), and many economic experts have predicted an economic (and housing) crash for Australia within the next 5 years or so. Bad news for sellers but great news for buyers.

I’m saving for my house through the First Home Saver Account, I’ve knocked down two financial years already and appreciate the 17% top up from the govt. 25-30 years ago, my folks could buy a modest block of land on the urban fringe’s for under a years average wage. Now anyone today needs at least three years average wage to buy an even modester urban fringe block. That’s a real increase of more than 200%. It’s not the size of the house that is pricing young folks out, its the land price. I won’t be rushing to buy anytime until the current massive preferential tax treatment on land/housing is rebalanced to a more appropriate level, as per the Henry Tax Review recommendations. In the mean time I shall keep saving astutely through the FHSA and other means.

I bought my house with my ex over 3 years ago with 5% deposit. We saved it in six months.  He was very lax about the concept of employment, so when he actually landed a semi-fulltime job, the money went straight to savings.

When we split (6 months after purchasing), he announced he never wanted anything to do with home ownership again and I could have it.  This attitude might have had something to do with the fact that it needed a couple of urgent repairs! I had what seemed like a huge mortgage (half of my take home income) and no child support.

I was super lucky to score a lucrative second job. I caught up financially, fixed the place up, and am now saving to get his name off the papers. His new gf has her eyes on the equity, as prices have risen a bit, but that’s a battle I’m prepared to fight. This place (a little 2 x 1 in a mostly industrial suburb) has cost me too much socially (try working two jobs as a single mother!) and financially to give up. 

The fact that house prices have risen so much and now cause so much stress and tension, and inspire such greed, alarms me.

I am 21 and am having my first home built as I type I am very proud of myself although its a horrible stressful event!!

I started saving when I was 17 (strict parents forced me) and bought the land when I was almost 20, I then bought the house midway through my 20s.
It didn’t take me very long to save I guess, I was also very lucky to find a great land deal so close to the city.
I guess it depends on each person and the events they face while saving.