How long it takes to save for a house or unit in Canberra, according to ANZ CoreLogic Housing Affordability Report

Despite a slight reduction in the number of years it takes to save for a home, the cost of servicing a loan is more of a challenge than ever, the latest ANZ CoreLogic Housing Affordability Report showed.

Canberrans are now required to sacrifice 40.2 per cent of their income to meet mortgage repayments on a house, according to data for the September quarter.

The previous peak was 39.6 per cent in March 2008, when the cash rate was 7.25 per cent.

The latest figures are an increase on the June quarter figures (37 per cent) and a significant jump from March 2020, when Canberrans were spending 26.6 per cent of their income on a house loan.

For Canberra unit owners, the latest figures show 24.5 per cent of income is required to service a loan, up from 21.9 per cent at the June quarter and 16.8 per cent in March 2020.

Canberrans would spend 10.1 years saving for a 20 per cent house deposit or 6.2 years for a unit, the latest figures show.

It's a slight improvement on the June figures, which were 10.8 years for a house and 6.4 years for a unit.

Prior to the onset of COVID-19, Canberrans were spending 7.8 years saving for a house and 4.9 years for a unit.

Felicity Emmett, senior economist at ANZ Research, said while there was an improvement on years to save a deposit, rising interest rates have meant a deterioration in mortgage serviceability.

"Mortgage repayments are rising much more quickly than prices are falling," she said.

Saving efforts have been hampered by rental affordability challenges, such as rental increases and cost-of-living pressures, Ms Emmett said.

"I think we need to be pretty circumspect when we look at [years to save a deposit] because we know at the same time that renters are facing a very large increase in cost of living with inflation running very hot at the moment and that is eroding their savings," she said.

"So that is making it more difficult for aspiring home owners to save for a deposit when they've got these imposts on their incomes."

The September figures show minor relief for Canberra renters.

The portion of income required to service rent for a Canberra house decreased slightly from 30 per cent in June to 28.5 per cent in September.

The portion required to rent a unit was almost unchanged at 22.7 per cent in September, versus 22.6 per cent in June.

With more rate rises on the horizon, Ms Emmett said it was likely Canberra would see a further deterioration of mortgage serviceability over the next six to 12 months.

"We at ANZ expect the cash rate to go to 3.85 per cent by May next year," she said.

"So that's a few more rate hikes from here on, suggesting that mortgage repayments and mortgage servicing is going to become more expensive and more unaffordable over that period."

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