He hopes to purchase a property in the next 12 months but the rising cost of living and high interest rates could push that plan further back.

The latest ANZ CoreLogic Housing Affordability report reveals that it takes buyers in Newcastle and Lake Macquarie longer to scrape together a deposit than it does in capital cities.

The report, which looks at local wages along with property and rental prices, said it takes the typical buyer in Newcastle and Lake Macquarie 13.7 years to save a deposit for a property.

In comparison, Sydneysiders take 12.8 years to save a deposit.

Mr Kinniard and his partner hope to have enough funds combined to purchase a home next year, however, he said the rising cost of living had put pressure on their savings budget.

"It's surprising that it's more difficult here in Newcastle, especially when you hear all the time about the cost of living in Sydney," he said.

"I will say though that it does make sense because I have certainly felt the pinch.

"I think by the time we reach our goal it would have been about 10 years of hard work and sacrifice."

The couple has a budget of $600,000 to purchase a house but they may opt for an apartment if property prices remain strong.

"We absolutely want to buy a house because we have a dog but with the rising costs of real estate in general we might have to be open to changing that dream just to get into the market and consider an apartment," he said.

He said rising interest rates are a concern and the rental crisis had caused added pressure.

"We have really had to prioritise what is important and this has been more of a focus over the past 12 months than ever before," he said.

"We are currently renting so it makes it a little more difficult to save, especially with how the rental market is at the moment with increasing costs and minimal availability in housing. We are finding that we constantly have to revise our normal budget which in turn affects how much we are saving."

The report from CoreLogic and ANZ also shows that payments on a typical mortgage are taking up more of the household budget than before.

CoreLogic head of Australian research Eliza Owen said that rising interest rates mean the monthly mortgage payment now takes out a larger chunk of the household income than it did in July.

"This housing downswing is not about housing affordability, it is about taming inflation with interest rates," Ms Owen said. "Generally the fall in prices is not enough to offset increases in interest rates."

Paying off the mortgage will take up 54.7 per cent of a local household's budget in Newcastle and Lake Macquarie, up from the 50.6 per cent it took in July.

In comparison, homeowners in Sydney would have to spend 51.1 per cent of their household budget on mortgage repayments, up from 47 per cent.

ANZ economist Felicity Emmett said that while property prices have cooled, the upswing in regional areas during the pandemic continued to affect the market in Newcastle and Lake Macquarie.

"When we look at regional NSW, we know that through the pandemic we had a very big deterioration in affordability, particularly in some of the lifestyle markets where the widespread adoption of remote working really helped knowledge workers move to some of those areas," Ms Emmett said.

"When we look at mortgage serviceability, it's the same issue that we're having around the rest of the country.

"Higher mortgage interest payments are making it much harder to service a mortgage despite the fact that prices are a bit lower."