The one group of Aussies who can all but give up on the dream of ever buying a house

Single Australians are most at risk of never being able to afford a home as house prices and interest rates rise.

House prices have continued to rise, especially in Australia’s capital cities, despite the Reserve Bank raising interest rates 13 times in 2022 and 2023.

The most aggressive rate hikes since 1989 have also reduced the number of banks that can make loans, as existing borrowers face much higher monthly mortgage payments.

In Sydney, a borrower now has to be in the top 3.8 per cent of income earners, with a salary of more than $220,000, to even get a loan for a typical home – and he or she will still be in mortgage stress.

Mozo personal finance expert Rachel Wastell said single people are now too expensive to ever buy a home.

In Sydney, a borrower now has to be in the top 3.8 per cent of income earners, with a salary of more than $220,000, to even get a loan for a typical home – and they will still be in mortgage stress.

“Sky-high house prices and rising interest rates mean the share of income needed to pay off a mortgage is at record highs, making it increasingly unlikely that single people can afford to buy a home on their own,” says she.

Australia’s average house price of $848,383 is now so expensive that someone with a 20 percent deposit of $169,677 would have to earn $130,520 to even qualify for a $678,706 loan.

This is based on the fact that banks can now only lend a borrower 5.2 times his salary, before taxes.

Even then, a homebuyer would be in a situation of mortgage stress, having to max out capacity and spend more than a third of their income on loan repayments.

In Sydney, the average house price was $1.442 million in May, CoreLogic data showed.

This meant that someone had to make $221,840 to even get a $1.154 million loan with a hefty down payment of $288,391.

Mozo personal finance expert Rachel Wastell said single people are now too expensive to ever buy a home

This person would still be in mortgage stress despite being in the top 3.8 per cent of earners who had a taxable income of more than $217,718 in 2021-2022, according to new tax authorities data released on Monday.

Ms Wastell said single people should consider buying with a family member or friend to get into the housing market.

“By pooling their resources, single people could increase their purchasing power and share the burden of high repayments, making it easier to enter the property market,” she said.

‘Working together with family or friends to buy a home can be a smart move, but it is essential to approach this with clear agreements and to have everything in writing.’