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How to save for a house deposit in a cost-of-living crisis

11 May 2023
• 5 minute read
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When Tim Gurner famously advised aspiring homeowners to stop buying avocado toast if they wanted to save for a deposit, he was criticised for not understanding the challenges faced by those looking to get on the property ladder.

Almost six years later, with surging inflation, multiple interest rate rises, and slow wages growth conspiring to create a so-called ‘cost-of-living crisis’, you’d be forgiven for thinking that saving for a house deposit is more challenging than ever.

The truth is, while a degree of sacrifice and discipline is undoubtedly required, it is possible for prospective first-time buyers to save for a house deposit, even in these financially trying times.

In this article, we look at what’s behind the current cost-of-living crisis, how much you should be aiming to save for a deposit, and, most importantly, tips and tricks to help you get there.

What has caused the cost-of-living crisis?

Broadly speaking, the cost-of-living crisis has been caused by three factors: inflation, interest rate rises, and slow wages growth. Let’s take a closer look at them now.


Whether it’s groceries, petrol, or power bills, you’ve probably noticed that many of life’s essentials have been getting more expensive. While inflation can have many causes, the main factors in this instance have been the ongoing impact of COVID-19, the war in Ukraine, and global supply chain issues resulting from both.

Interest rate rises

Raising interest rates is the main weapon employed by governments around the world to combat inflation. To reduce inflation, you need to slow down spending, and to slow down spending, you need to make credit (such as home loans) more expensive.

Slow wages growth

Although Australian wages grew faster in the last quarter of 2022 than in a decade, they haven’t kept pace with inflation. In layman’s terms, this means the average person isn’t getting the same bang for their buck that they used to.

How much should I save for a house deposit?

The larger the deposit, the less you need to borrow, which means less interest and lower repayments. This is one reason that 20 per cent is traditionally given as a good target to aim for. Another is that deposits of 20 per cent or more mean you avoid paying Lender’s Mortgage Insurance (LMI), which can cost thousands over the life of your home loan.

This is all well and good, but it does ignore the elephant in the room, namely how much property costs these days. Despite the decline in the housing market, the median national dwelling price is currently sitting at $704,723, meaning you would need to scrape together a cool $140,945 for a 20 per cent deposit on the average Australian property.

Also, it’s important to be aware that a deposit isn’t the only upfront cost involved. You will potentially need to factor in additional expenses like stamp duty, solicitors’ fees, and building and pest inspection.

To get an estimate of these upfront costs, check out our online calculator.

The good news

Before you get too down about the 20 per cent figure, it’s important to remember that it’s a nice-to-have rather than a must-have. Some lenders, including Great Southern Bank, have home loan options for as little as five per cent deposit.

Also, you might just be able to avoid LMI with less than 20 per cent anyway. With the First Home Guarantee, the Australian Government guarantees up to 15 per cent of the property’s purchase price to a Home Guarantee Scheme participating lender, meaning deposits as low as five per cent are possible without the need to pay LMI on top.

Tips to save for a house deposit

OK, so now we’ve got a good idea of the background, let’s dive into how best to save for a house deposit.

Set a target amount

It’s easier to remain motivated when you’ve got a dollar figure to work towards. Research your price range, decide what percentage deposit you need to save, and work out your target amount from there.

Create a budget (but be realistic!)

Now that you’ve got a target amount in mind, creating a budget can show you how long it’ll take to reach it. It’s important to be realistic though. If you don’t factor in the odd treat here and there, chances are you won’t stick to it.

An online budget calculator can help you with this.

Review your non-essential spending

Creating a budget is the perfect opportunity to see where you can make cuts to your non-essential spending. Do you really need all those streaming services? Are you getting good value out of that gym membership? Would losing the Friday night takeaway be the end of the world? Throw whatever savings you can make at your house deposit fund instead.

Review your essential spending

While you can’t eliminate essential expenses such as groceries and power bills, you can usually reduce them with a little bit of clever thinking. Shop around for cheaper alternatives to your current gas, electricity, and internet providers, take advantage of supermarket and petrol loyalty cards, and don’t be afraid of buying second-hand.

In fact, we have a whole range of thrifty tips to help you save on your essential spending!

Switch to a high-interest savings account

Seeking out the highest interest rate possible on your savings is a no-brainer. However, you may not be aware that some high-interest savings accounts offer generous bonus rates when certain eligibility criteria are met.

To pick an example out of thin air, if you deposit at least $2,000 into a Great Southern Bank Everyday Edge Account and make five or more Visa Debit card transactions every month, then you qualify for an extremely impressive bonus interest rate on a linked Great Southern Bank Home Saver Account.

It pays (literally!) to familiarise yourself with the conditions required to earn bonus interest on your savings account. You might even want to set up scheduled payments to make sure you never miss out.

Take advantage of clever savings tools

You can get some serious savings momentum going by combining a high-interest savings account with clever savings tools like The Boost and The Vault.

With The Boost, you simply choose an amount from $0.01 up to $5 to be automatically transferred to your savings account whenever you use your Visa Debit card.

Once you’ve done that, you can enjoy the irony of adding to your house deposit fund every time you buy avocado toast.

If you’re the type that’s tempted to dip into your savings, we have a solution. When you set up The Vault on your savings account, the balance will be hidden from you. Your regular payments and transfers will work as usual, you just won’t be able to see how much is in there.

You can even give your account a nickname such as ‘House deposit – DO NOT TOUCH!’ to help keep your eyes on the prize. With temptation removed, it should be much easier to keep growing your savings until you’ve reached your goal.

Don’t worry though, it isn’t a real vault. You can still view your balance and access your cash in a hurry if necessary.

Enter our Bench Your Rent competition

How much quicker would you reach your house deposit goal if you could save the amount you spend on rent for a whole year? Well, the lucky winner of our Bench Your Rent competition will get to do just that (up to a limit of $50,000)!

Simply visit the Bench Your Rent competition page, complete the entry form and you'll go in the draw to have your rent paid for a year!

We’re here to help

If you have any questions about saving for a house deposit, feel free to give us a call on 133 282. Alternatively, you can always pop into your local branch for a chat.

Important Information

Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL and Australian Credit Licence Number 238317. Conditions, fees and charges apply. This is general information and does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information, including the Terms and Conditions (T&Cs) booklet, before acting on it. The Financial Claims Scheme may apply to this product; refer to the T&Cs for more information.

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