A new report reveals first home buyers across Australia need an average of four-and-a-half years to save up a deposit.

The Bankwest report uses census data on the incomes of Australians aged from 25 to 34.

Sydney ranks as the most expensive capital city for buying houses, while Melbourne is the worst place for first time buyers looking for units.

Bankwest retail chief executive Victoria Short says the time needed to save a deposit has increased in every capital city over the past year.

"The most worrying aspect of the research is that we've seen a 22 per cent increase on last year, which is absolutely significant, so the concern is what if that trend continues?" she said.

"It may be the end of the Australian dream of home ownership for many of our young people."

Ms Short says the big increase in the time needed to save up for a deposit has been driven by increasing housing prices.