Looking to buy a regional home? Here's how long it will take you to save a deposit

It takes 9.4 years to save enough for deposit on a regional house, and 7.9 years for a unit, based on a 20 per cent deposit for a median-priced property and area-specific median household income data from the ANU Centre for Social Research and Methods.

That's the longest period on record, according to the latest ANZ CoreLogic Housing Affordability Report, which assumes households would save 15 per cent of their gross income each year.

With mortgage rates still at some of the lowest levels they've ever been, ANZ senior economist Felicity Emmett said that it was likely the 'deposit hurdle' was leading to a fall in first home buyer rates - not the ongoing cost of home ownership.

"The number of loans taken out by first home buyers fell 27 per cent between January and September 2021 as housing values increased at a much faster pace than household incomes," she said.

According to the report, "... the greatest affordability constraint currently facing regional populations is saving for and obtaining a mortgage, with ongoing housing purchase costs remaining relatively low."

The problem is most pronounced in regional NSW, now the third most expensive market in the country, relative to incomes, after Sydney and Melbourne.

There it takes 11.7 years to gather a 20 per cent deposit for a house, ahead of 10 years in regional Victoria and 9.5 years in regional Tasmania.

Sacrificing work/life balance to get a foot on the ladder

For Rebekah Stanley, 29, who'd watched prices in her hometown of Newcastle skyrocket since she'd returned three years ago, the deposit hurdle meant making some big lifestyle decisions in order to get a foot on the property ladder.

The Newcastle-based nurse, who had grown up in the city and had been renting there for three years after returning, got serious about buying in 2020.

She'd narrowed her search to an apartment and to two suburbs.

"I knew I didn't want to be too far away from town - I love the lifestyle in town. When I started looking I knew that I wanted to be close to the beach there were times when my mum and dad said maybe go further to get something more affordable."

With existing savings, she was in a better position than many beginning their first home buying journey, but still needed to sacrifice some work/life balance in order to keep up with Newcastle's soaring prices.

"Having chatted to a mortgage broker about what I could borrow with what I was earning, I ended up going full time at work," she said.

"That was a big thing, I had never worked full time before."

On advice from her mortgage broker, she also discovered she qualified the federal government's First Home Loan Deposit Scheme, which enabled her to pay only a 5 per cent deposit and avoid paying lender's mortgage insurance.

This, combined with working more hours and cutting back on spending, enabled Ms Stanley to accumulate a deposit faster than the typical Novocastrian - who would now need 13 years based on the median dwelling (house and unit) price.

But she did experience another phenomenon named by the report as a driver of increased prices in the regions: more competition for fewer listings.

"Speaking to everyone who has gone through that phase of looking at property and buying, it's definitely tough for everyone. It's not just the prices, it's also the competition - that's a big thing," she said.

She employed the services of buyer's agent Jack Henderson to help navigate the competitive market, and eventually secured a unit in The Hill earlier this year with his assistance, paying $560,000.

"Even when I went to buy this unit, when I went to look there was 40 to 50 people looking as well ... I was one of six people who made offers," she said.

Still makes more sense to buy in some areas

Strata fees aside, Ms Stanley said she's paying similar amount in mortgage repayments as her previous rental payments.

While that's not the case in all of Newcastle - the report estimates a household will spend 11 per cent more of their income to pay a mortgage than rent there - there are many parts of the country where it still makes more sense to buy.

That includes the Armidale, Dubbo and Tamworth regions in NSW, as well as Wangaratta-Benalla and Shepparton in Victoria, according to the report.

Part of this is due to the fact that rentals are at record high rates in regional Australia, with the portion of income required to pay rent hitting 32.7 per cent in June 2021, compared to 28.2 per cent for capital cities.

Ms Emmett said rental affordability may improve in the new year, but that first time buyers shouldn't expect much of a reprieve.

"As borders reopen and workers return to the city, we can expect to see some of these regional affordability constraints start to ease," Ms Emmett said.

"However many challenges will remain, especially for those looking to enter the market, with significantly higher deposits, a tightening of lending restrictions, and higher mortgage rates all features of the 2022 housing market."