Average renter would take 8.3 years to save enough for a house deposit, new Victorian analysis shows
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Exclusive: PBO report based on wage growth, house prices and rent rises says nearly a decade needed if 20% of gross income is put aside. It could take almost a decade for the average Victorian renter who puts aside 20% of their gross income to save enough money for a home deposit in 2035, according to analysis from the state’s independent Parliamentary Budget Office.
But if rents were to increase in line at the historically high rate seen in 2022 and 2023, the time needed to save for a deposit could blow out to over 65 years. The findings are from a report by the PBO, being released Friday, which was commissioned by the Victorian Greens as they continue to push the state government to introduce rent controls.
The report estimates the time required for an average household of renters, aged 25 to 34, to save a 20% deposit on a median-priced home, based on a methodology also used by the Reserve Bank of Australia. It said currently would take a household 6.4 years to save enough for a deposit on a $755,000 home if they put aside 20% of their pay. This has increased by 19% since 2019, when it took 5.4 years.
However, if rents continue to rise by 4% per year – reflecting the trend of the past decade – the time to save for a deposit will increase to 8.3 years by 2035. “This reflects house price growth (5.5% per year) outpacing household incomes growth (3.1% per year),” the report said.
