Why most young Aussies will NEVER own a housand be forced to live in an apartment

Most young Australians will never own a home in one of Australia’s largest cities, even if they earn an above-average salary – with apartments remaining their only option.

Over-immigration in recent decades has put a house with a backyard out of reach for young, single people looking for a medium-sized home in Sydney or Melbourne.

A record 387,000 migrants moved to Australia in 2022, boosting demand for housing, especially in Australia’s two most populous cities.

Australia’s population growth rate of 1.9 percent is also one of the highest in the developed world, making it even more difficult for the average income earner with a university degree to buy a house to live in as they compete with more potential buyers.

The typical house in Brisbane, Adelaide, Canberra and Hobart is also now too expensive for someone who wants to avoid mortgage stress.

That leaves apartments as the main options in Australia’s most populous cities for those who want to live a reasonable distance from the city.

RateCity calculated that someone earning $95,481 — a level slightly above the median, full-time salary of $94,000 — could now borrow just $525,800, taking into account the Reserve Bank’s 12 rate hikes since May 2022.

That means this person could only buy a $657,250 property with a 20 percent mortgage deposit of $131,450.

This down payment alone would take nine years to save for, assuming someone sets aside 15 percent of their savings each year.

This effort would be futile in Sydney where the median home price was $1.294 million in May, following a monthly increase of 2.1 percent despite a series of aggressive rate hikes.

Metropolitan Sydney has few suburbs with median house prices under $700,000, CoreLogic’s map data showed.

Even the most affordable area, Airds near Campbelltown, is still overpriced with an average price of $680,183 in a suburb that is 60 km from the city center.

The typical apartment in greater Sydney is out of reach for an average income earner as the city has a median unit price of $797,806.

However, there are options in western Sydney, with Greenacre having a median price of $655,625 and units on Rooty Hill typically worth $653,528.

North Sydney also has options, with West Ryde having a median unit price of $630,304.

Melbourne’s median house price of $911,007 is too expensive for an average income earner, but Roxburgh Park, 25 km north of the city, has a median price of $652,140.

Broadmeadows is even more affordable at $570,584 for a home.

City center apartments are available in Melbourne with Docklands with an average unit price of $625,359.

Bayside St Kilda is even more affordable at $534,336.

Canberra’s median home price of $943,253 is well out of reach for an average income earner, but Belconnen in the north of the city is attainable at $616,855.

Apartments in Barton a short walk from Parliament House cost $617,100.

Brisbane’s median house price of $792,125 is too expensive for an average income earner, but Zillmere, just eight miles north of the city, has an average price of $637,471.

There are also apartment options close to the city with Kangaroo Point on the Brisbane River and next to the Story Bridge with a median apartment price of $647,372.

Adelaide’s median house price of $704,448 is a little too expensive for the average income earner, but Kilburn, less than 10 km north of the city, has a median price of $652,242.

A beachfront apartment in Glenelg costs $607,257.

Hobart’s median home price of $696,900 is out of reach for the average earner, but Lutana on the Derwent River has a median value of $553,149.

An apartment in upscale Sandy Bay typically costs $623,610.

Some capitals are still affordable for middle-income earners, with Perth having a median home price of $606,563.

Belmont near the city and on the Swan River has an average price of $577,399.

Darwin is Australia’s most affordable capital with an average house price of $585,732. A city center apartment typically costs $408,628.

The Australian Prudential Regulation Authority considers it risky for anyone to owe the bank more than six times their pre-tax salary.

The banking regulator requires the banks to model a borrower’s assets to cope with a three percentage point increase in variable mortgage rates.

But since May 2022, RBA rates are up four percentage points, reaching an 11-year high of 4.1 percent this month.

Each increase in interest rates has reduced an individual’s borrowing capacity, which has also led to house prices falling over the year.

But in May, house prices rose in every state and territory, despite the Reserve Bank of Australia’s aggressive rate hikes, as high immigration and the return of international students pushed more people to compete for rental housing.

This encouraged wealthier recent migrants to buy rather than rent.

The net overseas migration level of 387,000 made up 78 per cent of Australia’s 496,800 population increase, including births minus deaths.

Australia’s population growth of 1.9 percent last year was one of the highest in the developed world and at its highest since 2008, dwarfing New Zealand’s 0.7 percent and the US’s 0.4 percent .

Few wealthy countries experienced faster population growth than Australia, with the exception of Canada, with a growth rate of 2.7 percent, which took in more than a million new permanent and temporary migrants last year.

But even then, the American think tank Demographia considers Sydney to be even less affordable than Vancouver, in western Canada, when incomes were compared to house prices.

Only Singapore had a higher population growth rate of 3.4 percent last year, but 80 percent of the city-state’s residents live in apartments owned by the government, a so-called Housing and Development Board.