First home costs: How much money do you need to buy a house in Australia?

Home ownership costs are vital to consider. Everyone knows buying a house in Australia these days isn't cheap, but it’s also easy to forget there’s more to buying a house than just getting a home loan. Several expenses could creep up on you if you don’t budget for them from the start.

So let's break down the common home-owning costs you’ll need to consider before buying property.

Home loan costs

Home loan costs are the big ticket item when it comes to buying property. According to the Australian Bureau of Statistics, the average mortgage size in Australia is currently $585k. 

The average variable interest rate in our database is 6.61% p.a. on a 25-year loan, so assuming you get an interest rate in that ballpark, a monthly mortgage repayment would be about $3,990. That’s $47,880 a year that you’d need to budget for as a baseline.

Council Fees

The amount you pay in council fees depends on your property’s location. Councils charge rates at a certain percentage of your property's value, so the more expensive the property, the higher the council rate.

According to Local Councils SA, the average council fee in South Australia is $31 a week. Let’s assume this is about average for the rest of the country: this means it's about $134 a month (assuming a month is 4.3 weeks) and $1,612 a year.

While it might not seem like much at a glance, it’s still over $1,000 you’d pay annually. Consider that with that money, you might get two to three months' worth of groceries for a small family!

Home Insurance

Many Australian lenders require you to have home insurance before approving your home loan. 

Like council fees, the amount you pay for insurance depends on multiple factors, like the location, size, and cost of your property, just to name a few.

The insurance provider also factors in recent natural disasters (fire, flood and storms) when calculating how much insurance you need to protect your home, since this creates your risk profile. 

According to Mozo's latest research, the average cost of home insurance is $1,460 per year. However, the price can vary significantly between states and territories. For example, insurance in North Queensland and Northern Territories tends to be much higher than in Victoria and South Australia.

Utilities: Gas, water, electricity, broadband 

Utilities don’t suddenly go away when you become a homeowner. In fact, you might find yourself paying a bit more than you expected. 

For example, if you’ve lived in a small apartment building, there’s a chance you didn’t pay a water or gas bill. But once you move to your ‘freestanding’ property, you’ll be in charge of the cost of those utilities.

Below we’ve broken down the average cost of standard household utilities in Australia. Be aware that costs will vary depending on your location.

• Electricity. The typical household spends about $1,645 a year on electricity, according to the Australian Energy Market Commission. That makes the monthly average about $137.
• Gas. Most households will have gas or electricity. Typically, gas tends to be the cheaper option. For this example, we’re assuming that the home will have both. Domain says that the average annual gas bill is $784, which is about $65 a month.
• Water. Renters typically don’t have to worry about a water bill, but once you are the owner, you’ll have to pay for your own water. Domain says the annual water bill is $904, which is about $75 monthly.
• Internet. Living in a modern world means needing internet access, and unfortunately it’s not free. Broadband plans typically tend to range from as low as $50 per month to over $100. Let's settle on $75.

Maintenance 

Maintaining your property is a major ongoing homeowner expense, especially if you have home insurance, since claims for damage resulting from negligence won't be covered. Experts recommend saving 1% to 3% of the property’s value for maintenance.

Some common house maintenance costs include:

• Cleaning the vents and gutters
• Pest control
• Mould treatment
• Lawn and garden maintenance
• Inspecting the roof. 

For this example, let’s assume your annual maintenance costs are about $6,000, roughly 1% of the average property value in Australia.

So now that we have some rough figures, what is the total monthly cost of running a home?

If you’re a first time buyer, there are some extra costs you’ll need to look out for during your first year of ownership. These additional costs will vary by financial situation and the state you live in.

Stamp duty

Stamp duty is a government charge on the transfer of property between owners. 

The tax can be between 4% and 5% of your property’s value. So if your house was valued at $609,000, then you’d make a one off payment of about $27,440. However, the exact amount you pay depends on which state your property is located. There are stamp duty concessions available that might help lower the total amount you must pay.

For example, NSW first home buyers don't have to pay stamp duty for properties valued less than $800k. Homes valued between $800k and $1 million may receive a concessional stamp duty rate. 

Check out our stamp duty calculator to know exactly how much you might pay.

Home loan deposit

The next major expense to consider when taking out a home loan is the size of your deposit. The standard home loan deposit is 20% of the property's value, but some lenders let you buy with deposits as low as 5% and as large as 40%. 

Mozo analysis found that the average size of a home loan deposit in Australia is now six figures, at $122,200 based on the December 2023 ABS lending indicators.

The size of your home loan deposit can affect the ongoing costs of owning your home, too, since your deposit establishes your loan-to-value ratio (LVR). Your LVR tier affects:

• The size of your principal.
• Your interest rate. 
• Whether you have to pay Lenders Mortgage Insurance (LMI). 

Mortgage registration

The government requires you to register your mortgage formally. This registration fee depends on your state and can cost between $120 to $200. 

Home loan application fees

When applying for a home loan, you might be asked to pay upfront application fees. While it's usually just a couple of hundred dollars, it's still something you’ll need to budget for.

The average cost of upfront application fee for owner-occupied home loans in Mozo’s database is currently $411.35.

Legal and conveyance fees

It’s a good idea to get a licensed conveyancer to review your contract, settlement documents, and double check the title paperwork when buying your first home.

Depending on the complexity, this could cost anywhere between $700 and $2,500. 

How much does it cost to buy property?

How much it costs to buy property varies greatly on your financial situation and where you want to buy. 
That’s why it's important to do ample research before entering the housing market. No one likes sticker shock, but the number might be more manageable if you prepare in advance.

If you’re looking to buy soon, compare home loans below to find one that works for you.