Australia’s median property prices are now so high that Aussies on the national average salary would not get a loan to buy a house in most major cities.
Those on the average salary of $103,000 are locked out of house ownership in Sydney, Melbourne, Brisbane and Adelaide unless they somehow manage to get a massive deposit together.
A report by Canstar analysis for the Sunday Telegraph found the situation affects prospective homebuyers in any age bracket, leaving many to wonder if they will ever be an owner occupier.
In Sydney, a single person would need a before-tax income of $234,960 to afford the loan of the average Sydney house price of $1.47million.
Shockingly, even a Sydney couple who were each earning the national average salary would not get a loan to buy a house in metropolitan Sydney at current prices.
Both partners would need before-tax incomes of $113,340 or more, and a deposit of almost $300,000, before they would get a loan approval.
In Melbourne – the country’s second most populous city – a single person would need a salary of $141,580 to afford the median house price of $917,000.
Things are even harder in Brisbane, where a single person would need a salary of $149,346 to get a house loan approval at the average price, while in Adelaide they would need $134,952.
Australia’s median property prices are now so high that Aussies on the national average salary would not get a loan to buy a house in most major cities. Stock image
‘Soaring property prices, combined with higher rates, rents and everyday living expenses have put buying a home firmly out of reach for many Australians hoping to buy a home they can call their own,’ Canstar director Sally Tindall said.
‘Someone on a middle-of-the-road income, without a partner to buy with, or a family member who can give them a leg up, is likely to find it extremely tough, in some cases, near impossible, to buy a median priced apartment, let alone a house, in key property hotspots across the country.’
Ms Tindall said this could mean people having to look for a smaller apartment to get a toehold on the Australian dream of home ownership.
‘A place further away from friends and family, a fixer upper that doesn’t have a swarm of interested buyers – even buying an investment property as your first foot on the property ladder,’ she said.
The situation has become so desperate that some young people with money to spend – but not enough to get a home loan – are looking to invest their money elsewhere.
Social demographer Mark McCrindle said many are now ‘scrapping the home buying target as a key measure of life success and focusing on financial independence’.
Even a Sydney couple who were each earning the national average salary would not get a loan to buy a house in metropolitan Sydney at current prices. Stock image
‘This research shows ambitious young Australians are being forced to climb the property ladder later in life amid skyrocketing house prices, interest rates, and inflation, meaning they are forced to buy their first home in their late 30s and early 40s,’ Mr McCrindle told the Sunday Telegraph.
He said a new Australian dream of being debt-free, rather than having a massive mortgage, is emerging.
Aussies are studying later and are spending money previously set aside for buying a home on short-term investments such as cryptocurrency and non-fungible tokens, Mr McCrindle said.
‘They are living at home longer, marrying later, studying at higher costs, and having children even later than ever before,’ he said.
‘They are being forced to either rely on the bank of mum and dad or wait for an inheritance.’
Offering some hope to those looking to follow the dream of home ownership, Australia’s two biggest cities are showing the signs of a property downturn due to an unsustainable gap between borrowing capacity and home values, though prices are still going up in some other cities.
The growth in Australian property prices is slowing but not enough to solve dire housing affordability challenges.
Sydney and Melbourne are driving the fall, with Canberra and Hobart values also declining, while price growth continues – albeit at a slowing rate – in other capitals and regions across Australia, analysis from property data firm CoreLogic shows.
‘Even in the highest growth markets like Perth, Brisbane and Adelaide, we’re seeing the pace of growth slow right down,’ CoreLogic research head Eliza Owen said.
Sydney and Melbourne have about 40 per cent of the nation’s housing stock, accounting for about half the total value of homes nationwide and largely affecting the change in value.
When seasonally adjusted for the typically slower December, national values grew slightly, but more homes have been hitting the market and are taking longer to sell.
Growth has been slowing since June but values have consistently climbed for 21 months, increasing almost 15 per cent in the same period and are unlikely to fall anywhere close to that amount, Ms Owen added.
