For years, Australians have been told that the biggest challenge to buying a home is saving a deposit. But what if that is only part of the story?
From a recent conversation on Property Now with Coposit founder Chris Ferris
Ask most Australians what's stopping young people from buying a home, and you'll get the same answer: they need to save a deposit.
It's sensible advice. But it misses something important, and it's something Chris Ferris has been thinking about a lot lately.
"We could get to a point where renting is more expensive than a mortgage," Chris said on a recent episode of Property Now, "but people can't get a mortgage because they don't have enough of a deposit, because they're renting."
That's the trap. And according to Chris, the latest Federal Budget hasn't done much to spring it.
The relationship between renting and saving isn't complicated, but it is brutal.
Higher rents leave less money to save. Less savings means it takes longer to build a deposit. A longer saving timeline means more years in the rental market. And if rents keep rising during that time, which Chris believes they will, the gap between where you are and where you need to be just keeps growing.
"I'd hate to be a renter in the next two to five years," he said plainly. "Not only do you have to worry about getting kicked out or whether you can hang a painting on the wall. You're going to face continuous rent rises because if there's no new housing supply coming to market, simple supply and demand says there's going to be more demand for that property you're already living in."
He's heard of people paying $1,200 to $1,300 a week for a two-bedroom apartment in Sydney. Enough, he noted, to cover a mortgage repayment on the same property if only they could get the deposit together first.
The Federal Budget made headlines for changes to negative gearing and capital gains tax. Chris's read on those changes is more nuanced than most of the coverage suggested.
Removing negative gearing from existing properties while keeping it for new supply is, he believes, a genuine attempt to level the playing field between investors and first home buyers. For years, investors have had a structural borrowing advantage over owner-occupiers bidding on the same properties. That advantage is now smaller.
"If a first home buyer wins an auction over an investor and gets a home for their family. I don't think anyone is going to view that as a bad outcome," he said.
But the more interesting signal in the budget, for Chris, isn't about housing policy at all. It's about immigration.
"If you're focusing on new supply and you're trying to bring prices down for everyday buyers, it means you're going to continue your immigration policies," he explained. "The budget is a signal that immigration is not going to slow down. And if immigration continues and new supply doesn't keep up, rents are going to keep climbing."
The government's bet is that steering investors toward new developments will unlock the supply pipeline and ease pressure on the market. Chris isn't convinced it will work as intended.
The core problem isn't demand for new properties; it's project feasibility. The cost of construction materials has risen sharply since COVID. Labour costs are up. Getting a project out of the ground is harder than it's been in decades. And the government's policy changes don't directly address any of that.
"For a developer, a project needs to reach a certain price to be viable," Chris said. "The government seems to be hoping that investors pile into new supply and push prices up to that point. But investors aren't going to pile in just because of a tax change. They're savvy enough to know that if the existing market isn't rising, they're not going to push new supply prices up either."
His conclusion: we'll see a gradual shift of investor interest toward new developments, but not the flood of capital that would make the 1.2 million homes target, already quietly abandoned, anything close to realistic.
Australia's housing conversation tends to reach for simple framing. Prices are up or down. Buy now or wait. Rent or own.
But the actual challenge facing a generation of potential buyers is more specific: how do you keep moving toward home ownership when rent is consuming the money you need to save, and the supply that would ease rental costs isn't coming fast enough?
There's no single policy answer to that. Supply matters. Borrowing capacity matters. The pace of construction matters. Immigration settings matter.
What Chris keeps coming back to is the deposit itself, not as a financial target, but as the specific obstacle that determines whether someone breaks the rental cycle or stays stuck in it.
"It's definitely enough to pay a mortgage," he said, thinking about those $1,200-a-week rents. "It's just finding that deposit and finding a way to break the rental cycle. That's the tricky part."
Property Now is Coposit's podcast exploring the trends, policies, and conversations shaping Australia's property market. New episodes drop regularly on Sundays. Find us here.
Coposit helps buyers get into new developments sooner by spreading the deposit over time. To explore eligible properties or learn how it works, download our app or contact our team.
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