The last few years have seen house prices skyrocket and wages stagnate – so what does that mean for housing affordability?
In this article, we reveal the salary your household needs to be earning to buy a home in each Australian capital city right now – and some of these figures may surprise you!
Note: We’ve made these calculations based on the median dwelling value for each capital city, using data from CoreLogic. These examples assume the buyer has paid a deposit of 20 per cent of the purchase price, so has not incurred any lenders mortgage insurance, and has paid all costs associated with the loan (such as establishment fees) and any government fees and charges (such as stamp duty) upfront.
The mortgage repayments are therefore based on a principal and interest loan of 80 per cent of the median dwelling value for the city, with an interest rate of 4.5 per cent, over a 30 year term. The required household total salary has been determined based on the assumption that the repayments on the loan should not exceed 30 per cent of your gross income, in order to remain affordable.
Sydney – $141,000pa
In Sydney, the median dwelling value is currently $870,554, so you’ll need to save a whopping $174,110 for your deposit! This will leave you will $696,444 to borrow, and your monthly repayments will be $3,529. You’ll need to be earning around $141,000 per year to make this an affordable option.
Melbourne – $116,000pa
A deposit on the average Melbourne property valued at $716,774 will require a $143,354 deposit, giving you a mortgage of $573,420. The repayments on this loan would be $2,905 per month, affordable for someone earning upwards of $116,000
Canberra – $95,000pa
A deposit of $117,573 will nab you a property in our nations’ capital, leaving you with a mortgage of $470,293 on a property valued at the current Canberra median of $587,867. If you’re earning $95,000 per year you should be able to afford the monthly repayments of $2,383.
Brisbane – $80,000pa
You’ll need a touch under $100,000 for a 20 per cent deposit on a Brisbane home – the median dwelling value here is currently $495,242. Each month, you’ll be paying $2,007 on your mortgage of $396,193, which would be 30 per cent of your income if you were earning $80,000 per year.
Perth – $75,000pa
With a median dwelling price of $461,149, you’re looking at a deposit of $92,229 to avoid paying LMI if you buy in Perth. You’ll be left with a mortgage of $368,919, on which you’ll repay $1,869 each month, and need to be earning close to $75,000 per year to make this affordable.
Adelaide – $71,000pa
The median property price in the City of Churches is sitting at $439,215, so if you can come up with a deposit of $87,843 your mortgage will amount to around $315,000. For someone earning $71,000 in Adelaide, this is an affordable home loan, with repayments totalling $1,780 per month.
An $87,379 deposit could see you secure a home in Hobart, where the median price is currently $436,899. Your mortgage repayments will be $1,771 per month on a loan of $349,519, manageable if you’re bringing in a salary of $70,000 per annum.
Darwin – $70,000pa
If you’re on the hunt for a property in Darwin, where the median price is $433,309, your deposit will need to be a touch over $86,000. On your mortgage of $346,647 you’ll be repaying $1,756 each month, and need to earn around $70,000 per year in income.