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

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

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 a 2018 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.



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



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 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 



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



 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 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



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



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)


Median house price

Deposit needed (20%)

Monthly repayments (4.5% interest)

Annual household income needed to avoid mortgage stress









































 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: 


  • 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. 


  • 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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Learn more about home loans

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

How to use the ME Bank reverse mortgage calculator?

You can access the equity in your home to help you fund your needs during your senior years. A ME Bank reverse mortgage allows you to tap into the equity you’ve built up in your home while you continue living in your house. You can also use the funds to pay for your move to a retirement home and repay the loan when you sell the property.

Generally, if you’re 60 years old, you can borrow up to 15 per cent of the property value. If you are older than 75 years, the amount you can access increases to up to 30 per cent. You can use a reverse mortgage calculator to know how much you can borrow.

To take out a ME Bank reverse mortgage, you’ll need to provide information like your age, type of property – house or an apartment, postcode, and the estimated market value of the property. The loan to value ratio (LVR) is calculated based on your age and the property’s value.

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

What is mortgage stress?

Mortgage stress is when you don’t have enough income to comfortably meet your monthly mortgage repayments and maintain your lifestyle. Many experts believe that mortgage stress starts when you are spending 30 per cent or more of your pre-tax income on mortgage repayments.

Mortgage stress can lead to people defaulting on their loans which can have serious long term repercussions.

The best way to avoid mortgage stress is to include at least a 2 – 3 per cent buffer in your estimated monthly repayments. If you could still make your monthly repayments comfortably at a rate of up to 8 or 9 per cent then you should be in good position to meet your obligations. If you think that a rate rise would leave you at a risk of defaulting on your loan, consider borrowing less money.

If you do find yourself in mortgage stress, talk to your bank about ways to potentially reduce your mortgage burden. Contacting a financial counsellor can also be a good idea. You can locate a free counselling service in your state by calling the national hotline: 1800 007 007 or visiting

How is interest charged on a reverse mortgage from IMB Bank?

An IMB Bank reverse mortgage allows you to borrow against your home equity. You can draw down the loan amount as a lump sum, regular income stream, line of credit or a combination. The interest can either be fixed or variable. To understand the current rates, you can check the lender’s website.

No repayments are required as long as you live in the home. If you sell it or move to a senior living facility, the loan must be repaid in full. In some cases, this can also happen after you have died. Generally, the interest rates for reverse mortgages are higher than regular mortgage loans.

The interest is added to the loan amount and it is compounded. It means you’ll pay interest on the interest you accrue. Therefore, the longer you have the loan, the higher is the interest and the amount you’ll have to repay.

What percentage of income should my mortgage repayments be?

As a general rule, mortgage repayments should be less than 30 per cent of your pre-tax income to avoid falling into mortgage stress. When mortgage repayments exceed this amount it becomes hard to budget for other living expenses and your lifestyle quality may be diminished.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

How much debt is too much?

A home loan is considered to be too large when the monthly repayments exceed 30 per cent of your pre-tax income. Anything over this threshold is officially known as ‘mortgage stress’ – and for good reason – it can seriously affect your lifestyle and your actual stress levels.

The best way to avoid mortgage stress is by factoring in a sizeable buffer of at least 2 – 3 per cent. If this then tips you over into the mortgage stress category, then it’s likely you’re taking on too much debt.

If you’re wondering if this kind of buffer is really necessary, consider this: historically, the average interest rate is around 7 per cent, so the chances of your 30 year loan spending half of its time above this rate is entirely plausible – and that’s before you’ve even factored in any of life’s emergencies such as the loss of one income or the arrival of a new family member.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

How much money can I borrow for a home loan?

Tip: You can use RateCity how much can I borrow calculator to get a quick answer.

How much money you can borrow for a home loan will depend on a number of factors including your employment status, your income (and your partner’s income if you are taking out a joint loan), the size of your deposit, your living expenses and any other debt you might hold, including credit cards. 

A good place to start is to work out how much you can afford to make in monthly repayments, factoring in a buffer of at least 2 – 3 per cent to allow for interest rate rises along the way. You’ll also need to factor in additional costs that come with purchasing a property such as stamp duty, legal fees, building inspections, strata or council fees.

If you are planning on renting the property, you can factor in the expected rental income to help offset the mortgage, but again it’s prudent to add a significant buffer to allow for rental management fees, maintenance costs and short periods of no rental income when tenants move out. It’s also wise to factor in changes in personal circumstances – the typical home loan lasts for around 30 years and a lot can happen between now and then.