Frugal Aussies take extreme measures to save first-home deposit in just three years

An Australian couple who recently bought a 3-bedroom new-build home in Clyde, Melbourne said it took three years to save a 10 percent deposit.
An Australian couple who recently bought a 3-bedroom new-build home in Clyde, Melbourne said it took three years to save a 10 percent deposit. Photo credit: Supplied.

Having shed many tears while saving a first home deposit, the experience of one Aussie couple is living proof that rising house prices are also a challenge for those over the ditch.

Saving a deposit is considered one of the biggest hurdles to home ownership. A current listings shortage in New Zealand is driving up house prices, the Real Estate Institute of New Zealand (REINZ) confirming 13,861 properties were for sale in June, the second-lowest on record. The national median sale price of $820,000 is up 28.7 percent year-on-year, requiring first-home buyers to stump up $82,000 to $164,000 for a 10-to-20 percent deposit. 

Earlier this year, Australian couple Josh and Caitlin bought a 3-bedroom new-build home in Clyde, Melbourne. CoreLogic Australia confirms the median house value in Clyde reached AU$689,032 (NZ$727,068) in June, national house values having risen 13.5 percent over the year.

Posting to the Facebook group 'Simple Savers', Josh and Caitlin said that by "scrimping, saving and sticking to spending plans", homeownership had finally become a reality.

"It took many tears, but many successes to get to this have somewhere we can call our own is absolutely amazing," Josh shared in the post.

The couple said their "basic three-bedroom home" in Clyde is a new-build with a backyard. It cost less than AU$750,000, the price-cap for the First Home Owner Grant in Victoria. Their deposit, around 10 percent of the purchase price, consisted of their own savings, the First Home Owner Grant (AU$10,000), and the HomeBuilder Grant (formerly AU$15,000 to AU$25,000).  

Having done their research on new-builds in the area, Josh and Caitlin settled on a tailored package for first-home buyers.

"The company was specifically for first home builders so had a number of inclusions, such as blinds and a driveway that are normally an extra cost, which in turn saved us nearly AU$8000 in after-build costs," Josh explained.

Responding to Newshub's questions about how easy it is to save for a first home across the ditch, the couple said their deposit (approximately AU$50,000) took them three years to save. During that time, they also paid for their wedding which "was not elaborate" and lost a large chunk of their savings after a family member became ill.

Their success came down to careful budgeting of their joint incomes, they said. Money was allocated to fixed expenses first: rent, utilities (water, phone, power) and car costs, followed by other expenses, and savings.  

As a couple with no dependents, they got their weekly food bill down to AU$50 (NZ$52.78).

"We only bought meat either on special or discount, with occasional vegetarian meals...we lived a 5-minute walk from Coles which had amazing discounts every day [and] assisted us to stick to our budget," Josh explained.

Meals were cooked in bulk, there were no bought lunches and the cost of takeaways was always shared with friends.

"When cooking, we'd cook for four or six as that gave us leftovers for lunch the next day, and some for the freezer - this meant we did not have to purchase lunch out at work and were able to save some extra," Josh said.

Rather than spend money going to the movies, the couple went to Cash Converters and Op Shops to find DVDs they could watch at home.  Their phones were second-hand and they stuck to monthly plan deals. 

They bought a "good quality coffee machine" and travel mugs, which they estimate "easily" saved them "over AU$50 a week". 

While saving, they furnished their rental property with mostly second-hand and free stuff sourced through local "buy, sell swap" sites, and donations from family and friends.

"We used desk chairs as couches as we couldn't afford to purchase them and had no space for a study… this meant the furniture in our house didn't exactly match everything else, but to us that didn't matter as it was a home and it suited us perfectly fine," Josh added.

Confirming the median house value in Clyde was AU$689,032 at the end of June, Eliza Owen, head of research at CoreLogic Australia said the First Home Owner Grant in Victoria is available to owner-occupiers 18 and over building or buying a new home.  They're required to move in within 12 months of the build being completed - and must live in the home for at least 12 months. There is no income cap.

"In Melbourne, the grant is worth AU$10,000 (AU$20,000 in regional Victoria up until June) and there's a price cap on the new home value of $750,000," Owen confirmed. 

A HomeBuilder grant of AU$25,000 was available between June 4 and December 2020. Applications were extended to mid-April 2021, when the grant amount was tapered to $15,000, Owen said.

For those purchasing new homes in New Zealand, a First Home Grant of up to NZ$10,000 is available through Kāinga Ora. Income caps of $95,000 (single buyer) and $150,000 (two or more buyers), and regional price caps (e.g. $700,000 for new-builds in Auckland), apply.

Under First Home Grant criteria, they're required to have been contributing to KiwiSaver for at least three years and must live in the home for at least six months.