An Australian now needs to earn $146,000 to barely afford a typical home in the capital, forcing people on average incomes to buy a unit.
The median home price in the nation’s capital rose 11 percent in the year through February to $949,410, following a 13th consecutive monthly increase, new CoreLogic data released 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.
“Home values have been more than resilient in the face of high interest rates and cost of living pressures,” he said.
“The current rise in home values reflects a persistent imbalance between supply and demand that varies in magnitude across our cities and regions.”
Commonwealth Bank Australian economics chief Gareth Aird said record immigration meant aggressive interest rate increases were no longer leading to falls in house prices.
“The upward pressure on house prices is due to the large imbalance between the supply of new homes and Australia’s growing population,” he said.
“Housing construction simply has not kept pace with the massive population increase, driven primarily by net overseas migration.”
An Australian now needs to earn $146,000 to barely afford a typical home in the capital, forcing people on average incomes to buy a unit (pictured, an apartment block in St Kilda West).
St Kilda West, near Melbourne’s Port Phillip Bay and 7km by tram from the city, has an average price of $608,792, making it a possibility for someone earning $93,660.
To afford a home in the capital’s mid-market, a professional buyer alone would need to earn $146,064, to be among the top 6.2 percent of earners.
That’s with a hefty 20 per cent mortgage deposit of $189,882 to qualify for a mortgage of $759,528.
RateCity calculations show that banks are lending borrowers up to 5.2 times their pre-tax salary.
Someone borrowing at maximum capacity would also be spending 38 percent of their income on mortgage payments, well above the 30 percent threshold for stress.
What can a person with an average income buy?
A professional with an average full-time salary of $98,218 can borrow $511,500 to purchase a $639,375 home, opening up possibilities for those who are happy to purchase a unit.
St Kilda West, a waterfront suburb 7km by tram from central Melbourne, has a median apartment price of $608,792, making it a possibility for someone earning $93,660.
But downtown, units are even cheaper: $475,352, meaning 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 affordable for someone earning $94,633.
Those who want to live in a home near the water and within driving distance of Brisbane have options on Bribie Island, where Bellara has a median price of $640,273, making it affordable for someone earning $98,504.
But to live in the city, someone can buy a unit for $633,304 with a salary of $97,431.
In nearby Spring Hill, the median unit price is even cheaper: $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 affordable for someone earning $94,633.
Those who want to live in a home close to the water and within driving distance of Brisbane have possibilities on Bribie Island, where Bellara has a median price of $640,273, making it affordable for someone earning $98,504.
State of the capital’s houses
People with average incomes cannot buy the typical house in the capital unless they are part of a couple with two incomes.
Sydney, which receives a higher proportion of foreign immigration, saw the median house price rise 11.7 per cent in the year to February to $1,395,804.
Getting a mortgage on a typical home in Australia’s most expensive big city would require a salary of $214,739 or double your income.
By comparison, Melbourne’s median house price of $942,779 requires someone to earn $145,042, in a city where prices have risen 4.4 per cent annually.
Brisbane isn’t much better off with its record median house price of $899,474, requiring a salary of $138,381, following a 15.7 per cent price rise.
Adelaide’s record median house price of $779,914 means a borrower has to make $119,987 in a city where prices have risen 11.7 per cent.
Even Perth, the continent’s most affordable capital, is now expensive: its record median house price of $718,560 requires a salary of $110,548, following a price rise of 18.6 per cent.
But in mining-rich Western Australia, the average full-time salary is higher, at $109,600, making it Australia’s most affordable capital market compared to income.
Hobart’s median home price of $696,508 requires a salary of $107,155 in a city where property values have fallen 0.2 per cent over the past year.
Darwin is the only market in the capital where a person with an average income can buy a house.
The median price here of $577,786 means someone can get a mortgage with a salary of $88,890, after an annual price drop of 0.1 percent.
Another surprise is that the second most expensive property market in Australia, after Sydney, is not Melbourne but Canberra.
The average price here of $967,671, after an annual increase of 2.3 percent, requires a salary of $148,872.
This is significantly higher than the Australian Capital Territory’s average full-time salary of $108,150, showing that even well-paid federal public servants would struggle to buy a home on their own.