New research has indicated it now takes the average couple more than four years to save a deposit for their first home.
The Bankwest First Time Buyer Deposit Report has shown the time it takes a first time buyer couple to save a deposit has decreased marginally since last year, falling to 4.1 years from 4.3 years. However, the result is an increase on the average of 3.8 years recorded in 2006.
Bankwest senior analyst Tim Crawford said first home buyer participation has fallen 35% since last year, and has hit a seven-year low.
"The fact that first time buyers are taking longer to save a deposit, especially in capital cities, directly contributes to this drop in new buyers entering the property market," Crawford said.
In order to save a 20% deposit for a home, buyers in Sydney would have to save the longest, stashing away 20% of their annual income for 5.7 years. Melbourne buyers would face the second-longest period to accumulate a deposit, with a saving time of 5.4 years.
The Bankwest report has suggested that this increased saving period, combined with the mounting cost of living, the removal of the FHOG Boost and general consumer wariness, have contributed to the sizeable slump in first home buyer participation.
"In order for the property market to prosper there needs to be a consistent number of first time buyers, as historically this has been the catalyst for growth in the sector," Crawford said.