Singles priced out of the Australian property market



Only two of Australia’s eight capital cities have a median house price that can be afforded by an average single income, new analysis by Australia’s leading financial comparison website, RateCity.com.au, shows.

 

Hobart and Adelaide remain the last affordable capital cities for the nation’s singles with a salary of $59,441 and $72,529 needed respectively to afford repayments* on a 30-year mortgage (with a deposit of 20 per cent at today’s average variable rate of 4.74 per cent).

 

Property prices on the east coast of Australia continue to rise to unattainable highs with a person looking to buy in Brisbane or Melbourne requiring an $80,866 and $96,706 salary respectively to afford a median priced house.

 

“Our analysis reveals a reality that many young Australians are now living; the impossibility of affording a median-priced house on an average salary in most capital cities,” said Peter Arnold, data insights director at RateCity.com.au.

 

“Those wanting to live in the nation’s capital will require a salary of $97,756 while Sydney’s property boom puts it at the top of the list with a six-figure salary of $137,556 needed to comfortably fund a mortgage on a median-priced house.

 

“Without a partner or family member to share mortgage costs with, the numbers paint a grim picture for millennials, many of which may be squeezed out. Even as part of a couple, east coast property prices are out of reach for many Australians,” he said.

 

“Many first home buyers, including young families, may find that they have to move away from careers in the CBD and the support of families to more affordable parts of Australia. This could have long term effects on Australian society and bring with it challenges for the future in many areas, including transport and childcare.”

 

How much you need to earn to buy a home

 

Capital cities

          

Location

Median house price

Loan size assuming borrowing 80%

Monthly repayment

Monthly household income needed*

Annual household income needed*

Sydney

$825,000

$660,000

$3,439

$11,463

$137,556

Melbourne

$580,000

$464,000

$2,418

$8,059

$96,706

Brisbane

$485,000

$388,000

$2,022

$6,739

$80,866

Adelaide

$435,000

$348,000

$1,813

$6,044

$72,529

Perth

$520,000

$416,000

$2,168

$7,225

$86,702

Hobart

$356,500

$285,200

$1,486

$4,953

$59,441

Darwin

$570,000

$456,000

$2,376

$7,920

$95,039

Canberra

$586,300

$469,040

$2,444

$8,146

$97,756

Capital city average

$544,725

$435,780

$2,271

$7,569

$90,824

 

 

 

States and territories

          

Location

Median house price

Loan size assuming borrowing 80%

Monthly repayment

Monthly household income needed*

Annual household income needed*

NSW

$408,600

$326,880

$1,703

$5,677

$68,128

Victoria

$310,000

$248,000

$1,292

$4,307

$51,688

Queensland

$420,100

$336,080

$1,751

$5,837

$70,045

South Australia

$275,000

$220,000

$1,146

$3,821

$45,852

Western Australia

$375,000

$300,000

$1,563

$5,210

$62,525

Tasmania

$268,000

$214,400

$1,117

$3,724

$44,685

Northern Territory

$458,000

$366,400

$1,909

$6,364

$76,364

 

Source: www.ratecity.com.au, ABS Residential Property Price Indexes, March house prices (June 2016).


Prominent Melbourne property industry identity, Jeff Grochowski offers some advice to young people on how to get started with home ownership.


Home ownership is a something that most young Australians aspire to. Unfortunately, it is very, very difficult to achieve without some creative thinking.


It takes an average income earner four to five years to save the twenty percent deposit. During that time, the person will probably be using income to pay rent instead of paying off a home. One way to get a head start is to form a partnership with trusted family members like siblings or parents.


Parents should not look at helping their offspring as an inconvenience. It is more like having 50% of an investment property. Over time, there may be capital gain and that income can be shared when the property is sold or moved into the name of one of the owners.


An additional benefit is that when a group of people buy a property together, the security offered or the size of the deposit can eliminate ( expensive ) mortgage insurance.


My advice to our customers is to be creative and start talking with family members. For an 18 year old, choosing to save up and go alone on the road property ownership will take years. In a family property syndicate, it will take a lot less time to have enough for stamp duty, legal fees and a deposit. It may be a challenging situation, however the long term gain and personal wealth potential for everyone involved is often worth facing the challenges.


"Owning 50% of something is better than owning 100% of nothing"


You can contact Jeff Grochowski at Accrue Real Estate

 

Accrue Real Estate aims to surpass client expectations by offering a property acquisitions service that goes outside the scope of services usually provided by your local Estate Agent

  •   Address: 92 York Street, South Melbourne VIC 3205

  •   Phone: +61 3 9696 0085

  •   Fax: +61 3 9696 0075



*Affording a mortgage is measured against the industry standard rule for classifying mortgage stress; no more than 30 per cent of a person’s income should go towards housing costs.