The median house price in Australia hits a record high $1.113 million

Released this week, the Domain House Price Report 2024 announced a new record for the median house price in Australia’s combined capital cities – $1,112,575 – after a year-on-year (YOY) gain of 8.9% in March 2024.

Wowsers. That sure is a big number. But it’s not the biggest number in the report.

Sydney, the city otherwise known as Australia’s property darling, recorded a monumental median price of $1,627,625, growing 11.1% YOY. 

According to the report, Perth’s median house price grew the most in the 12 months to March 2024 at a YOY rate of 16.6%. This now takes the median house price in Perth to $777,921 – just shy of a million dollars less than Sydney.

Adelaide (15.8%) and Brisbane (12.5%) also recorded significant house price gains over the last 12 months. 

The other capital cities failed to show the same enthusiasm for property price growth, though still recorded gains of between 0.7 - 1.9% YOY.

This is fantastic news for homeowners and investors, as it means there’s a good chance their property has increased in value since they bought it. For those looking to buy, on the other hand… good luck! 

A 20% deposit on the median home now costs more than two and a half times the median salary 

Medians, as you might already know, refer to the middle of a set of data. So, this means that half of all houses in Australia’s capital cities now cost more than $1.113 million. 

If you were looking to buy a house without paying for lenders mortgage insurance (LMI), you’d need to cobble together a 20% deposit of $222,600. In other words, about 2.7 times the median full-time worker’s annual earnings (about $83,000), according to the Australia Institute. 

Let’s take a look at how long it might take to save this sort of money. 

How long will it take you to save up the median Australian capital city house deposit of $222,600?

A Mozo survey, conducted as part of the 2024 Mozo Savings Report, found that only 9% of respondents reported saving between $1,000 to $2,000 per month for a house deposit. 

In fact, you’re much more likely to find that the majority of Australians are saving less than $500 per month to put towards their home deposit, and 41% save less than $200 per month. 

It’s almost enough for some to give up on the very concept of homeownership in this country. And some already say they have. 

Reasons Aussies aren’t saving for a house deposit

The survey also asked Australians why they weren’t saving for a house deposit. 

Over one-third of Australians say they’re not paid enough to save (36%). Another third say that they’re single and unable to afford it (34%). 

For 13% of respondents, it’s a matter of being unable to secure a home loan, and 12% say they’re prioritising quality of life over a mortgage. 

But what can you do if you still want to buy a home in Australia?

Home buying tips to navigate a challenging housing market

Check out the government-led initiatives available to you, such as the First Home Guarantee Scheme, which allows eligible Aussies to buy or build a new home with a deposit as low as 5% (or 2% in some cases). 

Just be aware that lower deposits may help you get your foot in the door earlier, but often result in higher interest repayments on your home loan. 

Additionally, federal Labor’s new Help to Buy scheme will likely roll out soon, as housing affordability issues continue to snowball. The exact details about the scheme, including eligibility and loan conditions, aren’t available yet, but we’ll keep an eye on it.

If you can’t afford to buy in your dream suburb, consider rentvesting as a way to get into the market. 

This strategy involves investing in cheaper property outside of your preferred suburb and renting it out to tenants while you continue to rent where you need to live.

As you pay off your investment home loan, your equity could grow and the value of your investment could rise, meaning you then have the chance to sell that property and buy a home in your ideal suburb.

Pooling your deposit money with friends and family to purchase a property is another viable option if you don’t have the funds to buy independently. 

Just make sure to formalise any agreements through legal documentation to maintain fairness and accountability, and reduce the risk of any financial fallouts.

If you can’t afford a full 20% deposit, compare low-deposit home loans. 

While you may still need to pay LMI, these home loans are purpose-built for those who can afford repayments, but can’t save the full deposit.

Just be aware that you’ll have a higher loan-to-value ratio (LVR) if you have a smaller deposit. This often means the interest rates you’re charged are higher too. 

Looking at the Mozo database, the average variable home loan rate for someone with 80% LVR is 6.82% p.a. (for a $400k loan). However, those with a lower deposit and higher LVR are looking at an average rate of 7.10% p.a. (90% LVR) or 7.35% (95% LVR). 

If you’re interested in doing some research into interest rates, make sure you compare home loans and use a borrowing power calculator to help work out what you can comfortably afford to buy.