House prices are rising rapidly in Melbourne — but first-home buyers require less savings in the Victorian capital to enter the market than in two other Australian cities, according to CoreLogic.
The property data analysis group calculated property prices in the most affordable quarter of the market in each capital city and measured them against different deposit and stamp duty amounts.
Melbourne’s “25th percentile price” for houses was $475,000, the most expensive behind Sydney ($666,000) and Canberra ($525,000).
This figure is the middle point between the cheapest and median priced house in that city.
In Sydney and Canberra it would cost more for a 10 per cent deposit and stamp duty on a house of that city’s “25th percentile price” than in Melbourne, according to the research.
In Melbourne, a first-home buyer would need $59,053 for a 10 per cent deposit and stamp duty at $475,000, the CoreLogic report states.
This compares with $92,333 in Sydney and $67,607 in Canberra.
However, the research does not take into account lenders mortgage insurance (LMI)
This is typically needed when borrowing more than 80 per cent of the property purchase price.
LMI is calculated as a percentage of the entire loan amount and increases as the loan-to-value and loan size increase, according to comparison website Lendi.
With a 10 per cent deposit for a house at $475,000, Melbourne’s “25th percentile price”, the lenders mortgage insurance (LMI) would be about $9000, according to Lendi.
First-home buyers with a 20 per cent deposit would avoid having to pay LMI.
The CoreLogic research shows a 20 per cent deposit and stamp duty in Melbourne would be $106,553 on a $475,000 house.
This is less than the amount needed in Canberra and Sydney with a 20 per cent deposit.
Meanwhile, Victorian first-home buyers will no longer have to pay stamp duty on purchases under $600,000, with concessions up to $750,000, from July.
CoreLogic head of research Cameron Kusher said a challenge for first-home buyers in Melbourne was that household incomes were outpaced by dwelling price growth.
“Entry into the housing market remains a real challenge, particularly in our largest and most expensive capital cities,” he said.
“Even in cheaper areas household income growth is fairly slow, which makes saving a deposit difficult.”
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