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An Australian now needs to earn $146,000 to be able to barely afford a typical capital city house – forcing average-income earners into buying a unit.
The nation’s median capital city house price surged by 11 per cent in the year to February to $949,410, following a 13th consecutive monthly increase, new CoreLogic data released on Friday showed.
This was despite the Reserve Bank raising interest rates 13 times in 18 months – taking the cash rate to a 12-year high of 4.35 per cent.
CoreLogic research director Tim Lawless said strong population growth meant there was an undersupply of housing.
‘Housing values have been more than resilient in the face of high interest rates and cost of living pressures,’ he said.
‘The ongoing rise in housing values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.’
The Commonwealth Bank’s head of Australian economics Gareth Aird said record immigration meant aggressive interest rate rises were no longer leading to house price falls.
‘The upward pressure on home prices stems from the big imbalance between the supply of new homes and the surge in Australia’s population,’ he said.
‘Home building has simply not kept pace with the massive uplift in population, primarily driven by net overseas migration.’
An Australian now needs to earn $146,000 to be able to barely afford a typical capital city house – forcing average-income earners into buying a unit (pictured is an apartment block in St Kilda West)
St Kilda West near Melbourne’s Port Phillip Bay and a 7km tram ride to the city, has a median price of $608,792 – making it a possibility for someone earning $93,660
To afford the middle-market capital city house, a professional buying alone would need to earn $146,064 – to be among the top 6.2 per cent of income earners.
That’s with a hefty 20 per cent mortgage deposit of $189,882 to qualify for a $759,528 mortgage.
RateCity calculations show the banks are lending borrowers up to 5.2 times their salary before tax.
Someone borrowing at the maximum capacity would also be spending 38 per cent of their income on mortgage repayments – well above the 30 per cent threshold for stress.
What can an average-income earner buy?
A professional on an average, $98,218 full-time salary can borrow $511,500 to buy a $639,375 home – opening up possibilities for those happy to buy a unit.
St Kilda West, a waterfront suburb a 7km tram ride from central Melbourne, has a median apartment price of $608,792 – making it a possibility for someone earning $93,660.
But in the centre city, units are even cheaper at $475,352, which means someone earning $73,131 can buy something.
In Sydney, Homebush West has a median unit price of $615,115 – 16km west of the city centre – making it accessible for someone earning $94,633.
Those wanting to live in a house near the water and within driving distance of Brisbane have possibilities on Bribie Island, with Bellara having a median price of $640,273 – making it something attainable for someone earning $98,504.
But to live right in the city, someone can buy a unit for $633,304 on a $97,431 salary.
In nearby Spring Hill, the mid-point unit price is even cheaper at $479,772, making it a prospect for someone earning $73,811.
In Sydney, Homebush West has a median unit price of $615,115 – 16km west of the city centre – making it accessible for someone earning $94,633
Those wanting to live in a house near the water and within driving distance of Brisbane have possibilities on Bribie Island, with Bellara having a median price of $640,273 – making it something attainable for someone earning $98,504
State of capital city houses
Average-income earners are locked out of buying the typical capital city house unless they are part of a dual-income couple.
Sydney, which receives a larger share of overseas immigration, saw its median house price climb by 11.7 per cent in the year to February to $1,395,804.
Getting a mortgage on the typical home in Australia’s most expensive big city would require a $214,739 salary or double income.
By comparison, Melbourne’s median house price of $942,779 requires someone to earn $145,042, in a city where prices rose 4.4 per cent annually.
Brisbane isn’t much better with its record median house price of $899,474 requiring a salary of $138,381, following a 15.7 per cent price surge.
Adelaide’s record mid-point house price of $779,914 means a borrower has to earn $119,987 in a city where prices rose 11.7 per cent.
Even the most affordable mainland capital city Perth is now dear, with its record median house price of $718,560 requiring a $110,548 salary, following an 18.6 per cent price jump.
But in mining rich Western Australia, the average, full-time salary is higher at $109,600, making it Australia’s most affordable capital city market compared with incomes.
Hobart’s median house price of $696,508 requires a salary of $107,155 in a city where property values have fallen by 0.2 per cent during the past year.
Darwin is the only capital city market where the average-income earner can buy a house.
The median price here of $577,786 means someone can get a mortgage on an $88,890 salary, following a 0.1 per cent annual price decline.
In another surprise, Australia’s second most expensive house market after Sydney isn’t Melbourne but Canberra.
The median price here of $967,671, following a 2.3 per cent annual rise, requires a salary of $148,872.
This is significantly higher than the Australian Capital Territory’s average, full-time salary of $108,150, demonstrating that even highly-paid federal public servants would struggle to buy a house on their own.
