Melbourne is by far Australia’s most affordable major city for renters and even potential house or apartment buyers during a cost-of-living crisis, new data shows.
An influx of international students and migrants has not driven up rents in the Victorian capital to the same extent as in Sydney.
Residents of an inner-city suburb, a short tram ride from the city, typically spend just 24 percent of their income on rent, compared to 43 percent in a Sydney suburb a similar distance from the CBD.
An average income earner looking to buy a home 12 miles from the city also has options in Melbourne without worrying about mortgage stress, which would be impossible in Sydney.
Melbourne’s average weekly rent of $529 in August was still much cheaper than Sydney’s $666.39, even though both cities host a higher share of new permanent and long-term overseas arrivals.
Melbourne is by far Australia’s most affordable major city for renters and even potential home or apartment buyers during a cost-of-living crisis, a wealth of data shows (pictured shows Matildas fans outside Flinders Street station )
It’s also cheaper than the equivalent rental cost of a Brisbane apartment of $544.72 in a city that receives a higher share of interstate migration, data from SQM Research shows.
But when rents for certain suburbs are compared to median household incomes from the 2021 census, Melbourne is by far the cheapest place for inner-city renters, despite increases of more than 20 per cent over the past year.
Gentrified, inner-city areas were particularly affordable for professionals who typically earn more money.
SQM Research managing director and founder Louis Christopher said that unlike Sydney, Melbourne had built new high-density apartments close to the city center in places like Docklands and Southbank, meaning it could accommodate an influx of new residents more cheaply.
“In the long run, Melbourne has been more successful in adding supply to the market than Sydney,” he told Daily Mail Australia.
‘You have a higher number of high-density housing that has managed to accommodate a lot of students in Melbourne; Sydney doesn’t really have that.’
In Carlton North, the average rent for an apartment was $573 per week, in a suburb where $2,400 is the median household income.
This means rent eats up 24 percent of income, which is still below the Australian Bureau of Statistics’ 30 percent threshold for rent stress.
Rents in zip code 3054 are actually cheaper than they were in February 2020, shortly before the pandemic, when renters were paying $693 a week in a suburb 2.5 miles from the city center.
Sydney is significantly more expensive when the weekly average rent is compared to the median household income for a suburb from the 2021 census data.
Zetland, south of the city, is the same distance from the city center as Carlton North is from Melbourne’s central business district.
The average rent here is a very expensive €949 in a suburb where the average weekly household income is €2,192.
Someone living in the 2017 zip code would most likely be in rent stress, with a lease eating up 43 percent of income.
In Carlton North, the average rent for an apartment was $573 per week, in a suburb where $2,400 is the median household income. This means rent eats up 24 percent of income, which is still below the Australian Bureau of Statistics’ 30 percent threshold for rent stress.
In Brisbane, Dutton Park, 4 km south of the city centre, has an average weekly rental price of $608 in a suburban area with a typical household income of $1,739.
Rent in zip code 4102 would make up 35 percent of household income.
An average full-time worker who earns $95,581 a year also has more choices when it comes to buying a home or unit without mortgage stress, defined as owing the bank six times or more of what you earn.
Broadmeadows, 14 miles north of the city, has an average house price of $571,184, which is significantly lower than central Melbourne at $923,881, according to data from CoreLogic.
With a 20 percent down payment of $114,237, the middle-income worker with a $456,947 mortgage would have a manageable debt-to-income ratio of 4.8.
Someone wanting an apartment in a sought-after location near the water could try St Kilda, 7 km from the city, centered on $537,922, a level below Melbourne’s median unit price of $603,829.
That would be impossible in Sydney, where houses and apartments are expensive for the average income earner to buy them for themselves.
A home in Bankstown, 14 miles southwest of the city, typically costs $1,287,980, a level below Sydney’s midpoint, which is $1.334 million.
A middle-income worker with a $257,596 down payment and a $1,030 million mortgage would have a dangerous debt-to-income ratio of 10.8.
A combined income of $171,731 would be required to fall within the “six” threshold for mortgage stress in a city.
Apartments near the city or the water are also popular in Sydney.
Someone who wants an apartment in a sought-after location near the water can try St Kilda, 7km from Melbourne’s city centre, which is priced at $537,922
Hillsdale, a less-fashionable suburb between the airport and Maroubra beach, has an average apartment price of $741,060, which is lower than mid-Sydney’s $817,059.
With a 20 percent mortgage deposit of $148,212, a $592,848 mortgage would yield a debt-to-income ratio of 6.2, placing the country in the stress category.
Brisbane’s far south has suburbs with median house prices below $600,000, including Browns Plains, 17 miles from the city, where $556,302 is the median price.
This is well below Brisbane’s $819,932.
Units near the Brisbane River and the city are still affordable, with South Brisbane having an average unit price of $591,314, which is above the mid-city $520,346.
The Reserve Bank of Australia’s 12 interest rate hikes since May 2022 have had less of an effect in Melbourne, as prices did not rise at the same rate as those seen in Sydney and Brisbane during the pandemic, when spot rates were at record lows of 0.1 per cent. month. cent.
Melbourne under Labor Prime Minister Daniel Andrews also experienced the longest lockdowns in the world, with 246 days under tight restrictions in which people left Victoria for Queensland.
“The evidence strongly shows that there has been an outflow of interstate migration from Victoria – it really started to pick up during Covid,” said Christopher.
“In absolute terms, Melbourne rents have gone up, Melbourne house prices have gone up, just not as much as Sydney – there’s been more room in the Melbourne accommodation market.”