More millennials are foregoing their avocado toast and lattes in favour of saving up for a house deposit. 

Consistent and conscientious savings plans are propelling more first home buyers into the property market, with Westpac data showing more millennial customers are digging deep to save for a home.

The research shows the highest number of first home buyer loans in March and April 2018, compared to the same period in the previous two years.

Kathryn Carpenter, Westpac’s Head of Savings, said first home buyers are being diligent with their savings and digging deep to save for a home.

Related reading: Advice for first home buyers after new research shows most are clueless about buying property: ME Bank

“Millennials are often depicted as a generation more focused on life experiences and living in the ‘now’. However, our research shows that many are in fact taking saving for a home deposit seriously and prioritising it above other goals including travel or lifestyle,” Carpenter said.

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“It is great to see our millennial Westpac Life customers making the most of their savings plans and the timing could not be better with the current cooling of the property market.”

The research also revealed the younger end of the millennial spectrum (18-24) are already starting to save for a home.

“Our data shows reaching 25 appears to be a key tipping point for customers moving from thinking about saving for a home, to seriously saving for one”, commented Carpenter.

Dion Tolley, a real estate agent from Place Bulimba, told WILLIAMS MEDIA he's started to see more first home buyers entering the market.

Related reading: Millennials need more help in understanding the buying process

"The investor market has pretty much left in the last year, given the investor squeeze from the banks, and the pressure they are putting on with lending requirements. Also with the changes to stamp duty concession at $499,000, we are definitely seeing more first home buyers entering the market along with those interest rates. As the concession has been extended for 12 months, more first home buyers are moving into the market instead of renting," he said.

"I think most people are sick of paying off investors mortgages and want to own their own homes.

"Most first home buyers typically purchase between the $350,000 to $499,000 threshold, and will typically go for the two-bedroom, two-bathroom, one car apartments. Established properties are more consistently snapped up than off the plan apartments.

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"It has usually taken most of my clients who are first home buyers a couple of years to save up a decent deposit. Their parents will use the equity from their own home to tip them over that 20 per cent threshold to avoid lenders mortgage insurance because that does add on a fair whack to the weekly mortgage repayments," he said.

Saving tips for first home buyers

1. Know what you’re saving for
It’s important to know what your end goal is. At the most basic level, you know you’re saving for a home. But it’s a good idea to get more specific – get a good indication of what your borrowing capacity is and what size deposit you’ll need. There will also be a range of other expenses to cover, such as stamp duty and legal fees. Get a clear idea of what the total is you’re looking at and you’ll be in a good position to get started.

2. Create a budget
This doesn’t have to be a drag. A good budget is essentially a tool to show you how much money you have coming in and what expenses you have going out. When you have a clear idea of your incomings and outgoings, you’ll be in a better position to see where you might be able to cut back on expenses and find extra savings.

3. Be realistic about what you can save
It stands to reason that the more you save for a deposit, the less you’ll need to borrow and therefore the less interest you’ll pay. But it’s also important that you don’t set yourself up to fail. Having your budget in order will give you a good indication of what you can realistically afford to save on a regular basis. 

4. Have a dedicated savings account
A savings account isn’t just necessary for the obvious reason that you’ll need somewhere to save for a deposit – your lender will also want to see an established savings history to give them comfort about your ability to service a mortgage. 

5. Boost your savings with any extra cash
If you get a lump sum of money such as a tax return or perhaps a bonus from work, think about sticking it straight into your home deposit savings account.

6. Already got savings? Consider locking them away in a term deposit
As your savings grow, you might want to consider locking them away in a term deposit. A term deposit lets you lock your savings away for a set period of time (the ‘term’) at a fixed rate of interest. This gives the certainty of knowing exactly what the return on your money will be at the end of the term. Aside from benefiting from earning interest on your money, term deposits can be a good way to help steer clear of the temptation to dip into your savings because your money is locked away until the end of the term deposit length you’ve selected. 

Related reading:

2018 Budget ignores millennial's housing woes

Despite concerns over tax increases for investors, the spike in first home buyers is encouraging

First-home buyers are back in the market