How much you have to earn to buy (and live comfortably) in Australia's capital cities



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Whether you’re moving to Australia, or are dreaming of greener pastures in another state, you’ll need to calculate your cost of living before buying.  

Australian property hopefuls may feel like soaring house prices are pushing the dream of home ownership outside of their reach. Housing affordability is a particular problem for younger generations. Less than a third (29 per cent) of 25-35-year-olds are homeowners, according to the Household Income and Labour Dynamics in Australia survey. 

It stands to reason then that most of the wealth is in the hands of older Australians, who are far more likely to own a home. Over 65s’ wealth has grown 61 per cent since the survey started in 2001, while their 20- and 30-something counterparts have seen their wealth grow at 3.2 per cent. 

To state the obvious, the meteoric rises in property prices we’ve seen in the last few years on the east coast of Australia have not been matched by wage increases. As a result, homeowners have to earn a lot more than they did a few years ago to comfortably make repayments. 

RateCity crunched the numbers and ranked Australia’s capital cities in ascending order based on how much you have to earn to buy (and avoid mortgage stress).

While many of us measure mortgage stress based on our ability to keep up to date with household bills, the financial definition is spending 30% or more of your pre-tax income on home loan repayments as a rule of thumb.

A smaller deposit would generally push the interest rate higher or attract mortgage insurance. The estimates also do not account for the added financial pressure of coming up with a deposit. 

Compare the following average house prices against average salary in that Australian capital city, and the household income you’ll need to avoid mortgage stress.

8. HOBART

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134 Melville Street, Hobart, TAS, 7000 – $405,000 sold

 Median house price: $409,592 

Monthly repayments: $1,660 

Average household income: $70,356 

Household income needed to avoid mortgage stress: $66,411

7. ADELAIDE

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14 Ely Place, Adelaide, SA, 5000 – $515,000 sold 

Median house price: $519,517 

Monthly repayments: $2,106 

Average household income: $75,504 

Household income needed to avoid mortgage stress: $89,841

6. BRISBANE

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6 Suzanne Street, Wynnum West, QLD, 4178 – $550,000 sold

Median house price: $551,840

Monthly repayments: $2,237 

Average household income: $77,844 

Household income needed to avoid mortgage stress: $89,475 

5. PERTH

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6A Lynton Street, Mount Hawthorn, WA, 6016 – $550,000 sold

Median house price: $554,095 

Monthly repayments: $2,246 

Average household income: $80,289 

Household income needed to avoid mortgage stress:  $89,841

4. DARWIN

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 38 Harney Street, Ludmilla, NT, 0820 – $592,000 sold

Median house price: $593,329 

Monthly repayments: $2,405 

Average household income: $84,500 

Household income needed to avoid mortgage stress: $96,202

3. CANBERRA 

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3 Levelque Street, Harrison, ACT, 2914 – $723,000 sold 

Median house price: $723,980 

Monthly repayments: $2,935 

Average household income: $92,248 

Household income needed to avoid mortgage stress: $117,386

2. MELBOURNE 

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95 Barnett Street, Kensington, VIC, 3031 – $880,000 sold

Median house price: $880,902 

Monthly repayments: $3,571 

Average household income: $78,780 

Household income needed to avoid mortgage stress: $142,829

1. SYDNEY 

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55 Nagle Avenue, Maroubra, NSW, 2035

Median house price: $1,167,516 

Monthly repayments: $4,733 

Average household income: $80,292 

Household income needed to avoid mortgage stress: $189,300

Salary needed to own a median priced house (while avoiding mortgage stress)

Location

Median house price

Deposit needed (20%)

Monthly repayments (4.5% interest)

Annual household income needed to avoid mortgage stress

Sydney

$1,167,516

$233,503

$4,733

$189,300

Melbourne

$880,902

$176,180

$3,571

$142,829

Brisbane

$551,840

$110,368

$2,237

$89,475

Adelaide

$519,517

$103,903

$2,106

$84,234

Perth

$554,095

$110,819

$2,246

$89,841

Canberra

$723,980

$114,796

$2,935

$117,386

Darwin

$593,329

$118,666

$2,405

$96,202

Hobart

$409,592

$81,918

1,660

$66,411

 Note: Average house prices are from Domain State of the Market Report, September 2017. Average income based on ABS average weekly earnings, May 2017.

Where can you afford to live in Australia? 

These figures demonstrate that unfortunately, people on single incomes have little hope of attaining a mid-range property on the east coast of Australia without mortgage stress – unless they are on six figure salaries. 

Couples with one average earner and one low earner or non-earner are unlikely to be able to comfortably repay a loan for an east coast property. 

For those looking to buy in the most popular Aussie capital cities, the following is worth keeping in mind: 

Sydney

  • For first home buyers wanting to move to Sydney, an average household income of nearly $200,000 is needed.
  • The average family would not qualify for a loan, as when you compare the average mortgage repayments to an average Sydney income, the repayments would be 70 percent of their income. 

Melbourne

  • For first home buyers wanting to move to Melbourne, an average household income of nearly $150,000 is needed.
  • The average family would not qualify for a loan, as when you compare the average mortgage repayments to an average Melbourne income, the repayments would be 54 percent of their income.
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