Australians hoping to get on the property ladder are in for some bad news, as new research reveals the staggering salary they need to earn to afford a home in a capital city.
Home ownership in even the smallest capital cities seems out of reach for most Aussies, especially the younger generations just entering the job market.
Data from the Parliamentary Library, commissioned by the Greens, showed that a borrower would need to earn $164,400 a year – two-thirds more than the average salary, which is $98,218.
That means the average salary will need to rise by 67 per cent before Australians can comfortably afford a home in the current market.
Max Chandler-Mather, the Greens’ housing spokesman and leader of the movement to abolish negative gearing tax breaks for investors and landlords and the 50 percent capital gains tax credit, shared the data last week.
New research has revealed the salaries Australians living in capital cities need to earn (pictured) to afford a median-priced home
Parliamentary Library data, commissioned by the Greens, showed a borrower would need to earn $164,400 a year to avoid mortgage stress
“Buying a home has become an impossible dream for far too many,” he wrote.
The research found that an Australian looking to buy a median-priced home in Brisbane would need to earn $178,090 to avoid mortgage stress.
A homeowner is considered to be under mortgage stress if their repayments exceed 30 percent of their income.
Sydneysiders looking to buy a median-priced home would need to earn $293,578 a year – putting them in the top 1.5 per cent of Australian earners – while Melburnians would need a salary of $189,962.
The prospects were not much better in Australia’s quieter cities, where Adelaide required a salary of $163,627 and Hobart $148,948.
Perth requires a salary of $140,313 and people looking to buy in Darwin, Australia’s most affordable market with a median price of $577,786, still need a salary of $124,339.
In Canberra, a salary of $205,073 is needed to buy a house with an average price of $967,671.
Many Australians believe the dispiriting figures only confirmed their fears – that they will never be able to afford their own home – with many blaming tax incentives for investors.
Many Australians felt that this terrifying figure only confirmed their fears that they will never be able to afford their own home in a city.
One wrote: ‘This is a problem. Multiple factors comprise population growth. Little to offer. Subsidies for home buyers that stimulate demand when supply is low.
‘There is also the problem of tax breaks. Houses are treated as investments. Homeowners receive tax benefits such as negative gearing and deductions.
‘With all those incentives, it is stupid not to invest in houses, the rich are getting richer.
‘A significant number of politicians, more than 50 percent, own several houses. Labor and the Liberals are too scared to make significant changes to taxation.”
Several other commentators blamed investors for buying up properties in previously affordable markets, creating housing shortages and sending prices skyrocketing.
‘The only way we can solve this crisis is if Labor finally works with the Greens to phase out the huge tax breaks for property investors, such as negative gearing, which deprive millions of renters of the opportunity to buy a home.
“The only way we can solve this crisis is if Labor finally works with the Greens to phase out the huge tax breaks for property investors that deprive millions of renters of the opportunity to buy a home,” Chandler-Mather said.
However, hundreds of Australians sharing their thoughts online encouraged politicians to crack down on migration.
The Greens made no mention of population growth in their press release.
“Immigration has created such a demand for housing (Mr. Chandler-Mather), why can’t you talk about this?,” one commenter wrote.
Population growth is at its highest level since the early 1950s, with a record 548,800 migrants moving to Australia in the year to September.
The only properties affordable to those on below-average incomes who want to avoid mortgage stress are those in more remote capitals
House prices in the capital rose 11 percent in the year to February, data from CoreLogic showed.
This happened even after the Reserve Bank raised interest rates for the thirteenth time in eighteen months in November to a twelve-year high of 4.35 percent.
The only properties affordable to those on below-average incomes who want to avoid mortgage stress are those in more remote capitals.
A salary of $94,981 would buy you an apartment in Perth, where $482,972 is the average price.
A wage level of $83,648 would purchase a Darwin unit, with $367,951 being the midpoint.