Bigger wage is a new home truth
Income threshold to buy property surges
Householders now need to earn more than $500,000 to own a home in some Queensland suburbs, with new data showing the income threshold to buy property has surged by up to 50 per cent in a year.
Exclusive research by comparison site Finder found buyers will fork out an extra $14,000 on average every year to service their mortgage, while securing a loan for a house or unit in 186 Queensland markets requires a pay rise of 30 per cent or more.
The analysis assumed a 30year loan term with a 20 per cent deposit.
At the top end of the market, a pay cheque of between $517,444 and $581,111 — three times the average household earnings of $186,264 — is in order for a home in three suburbs including Mermaid Beach on the Gold Coast, New Farm (Brisbane) and Sunshine Beach (Sunshine Coast).
Last year, no Queensland suburbs hit the $500,000 income bracket.
Finder head of consumer research Graham Cooke said rising interest rates and soaring home prices had pushed the income bar to new extremes – often by amounts eclipsing wage increases.
“That’s left many people in the position where they need to spend more than they did a year ago but, unless their income has really gone up, the amount they can borrow is less,” Mr Cooke said.
The rise in interest rates from 4.96 per cent for new loans in January 2023 to the current rate of 6.23 per cent meant, even without house price increases, Aussies needed an extra 15 per cent in their pay packets to buy the same property at the start of this year.
Gold Coast buyers’ agent Oliver Dunstan, of Rose and Jones, said a shortage of homes listed for sale in the most desirable areas meant vendors, in most cases, were still commanding top dollar for their properties despite a significant drop in buyers’ borrowing capacity.
“Most vendors haven’t been negatively impacted as the depth of buyers allows them to trade at the same or similar prices to what they may have achieved 12 to 24 months ago, whereas some buyers need to adjust their expectations and potentially look at different locations or dwelling types,” Mr Dunstan said.
“When some of these sellers become buyers, however, their expectations also need to shift as they may not be able to borrow as much as they could have, and low stock levels mean they will need to compete for quality property. Upsizing remains a tricky task for most in today’s market.”
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said “a perfect storm of extraordinary market conditions” had led to surging house prices and, consequently, declining rates of home ownership.
“There is a generation of people out there who are disillusioned and feeling like they’re not able to realise the dream of home ownership. We also know there a lot of people who have fallen out of home ownership and would like to seek reentry,” Ms Mercorella said.