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Property pain: Aussie homebuyers facing new $145,000 dilemma

It’s a tough situation for home buyers, with property prices and interest rates remaining stubbornly high.

Australian currency fanned out and an aerial view of homes in Sydney, mostly apartment blocks.
Aussies need to earn significantly more than the average income to comfortably afford a home. (Source: Getty)

Rising interest rates and property prices are making it harder for Aussies to afford a home, especially in the nation’s capital cities.

New research from Canstar investigated how much you would need to earn to afford a house in each capital city with a 20 per cent deposit, but without contributing 30 per cent or more of your after-tax income toward repayments.

The findings revealed Sydneysiders needed to earn the most – $239,480 a year – to be able to comfortably afford the repayments on a house, based on CoreLogic’s latest median property value for March 2023.

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However, average before-tax earnings in the harbourside city are $94,130 - or $145,350 short of what would be needed.

Looking around the capital cities, it’s a similar story. Those who want to buy a house in Perth or Darwin need to earn close to $115,000 a year to avoid mortgage stress – roughly half of what those in Sydney need – but that is still well above the average before-tax income in these cities.

Annual Income Needed to Afford a House in Each Capital City

Capital City

Median Property Value

Deposit (20%)

Monthly Repayment

Average Annual Before-Tax Income

Before-Tax Income to Avoid Mortgage Stress

Difference

Sydney

$1,230,581

$246,116

$5,985

$94,130

$239,480

-$145,350

Canberra

$944,809

$188,962

$4,595

$104,993

$183,861

-$78,868

Melbourne

$898,644

$179,729

$4,371

$93,283

$174,898

-$81,615

Brisbane

$772,020

$154,404

$3,755

$91,556

$150,250

-$58,694

Adelaide

$694,818

$138,964

$3,379

$86,216

$135,205

-$48,989

Hobart

$691,859

$138,372

$3,365

$82,493

$134,645

-$52,152

Perth

$593,385

$118,677

$2,886

$103,402

$115,478

-$12,076

Darwin

$582,415

$116,483

$2,833

$90,693

$113,358

-$22,665

Combined Capitals

$851,386

$170,277

$4,141

$94,000

$165,695

-$71,695

“The rapid rise in the cash rate may have put a stop to the upward trajectory of property prices but the latest CoreLogic figures show they are on the way back up in some areas,” Canstar editor-at-large and money expert Effie Zahos said.

“It’s unusual for property prices to increase as interest rates are rising. One would expect that interest rates would need to be cut for property values to rise again but a number of factors, such as low supply and surging migration, may be propping up prices.”

Zahos said aspiring homebuyers could be caught in mortgage stress right out of the gate with higher property prices being matched with higher interest rates.

“Rising property prices are cementing the fact that a single-income earner can’t buy a home on their own wage without incurring significant mortgage stress,” Zahos said.

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