Income Needed for Mortgage – City by City

December 11th, 2015
Property prices vary widely across Australia, with homeowners needing to earn six figures in five capital cities just to feel comfortable paying the mortgage. After analysing home loan data across the country, Mortgage Choice has released a report comparing minimum repayment rates in each Australian capital. Unsurprisingly, Sydney is the most expensive place to live, with Hobart the most affordable. In separate data released by the Real Estate Institute of Australia (REIA) and Adelaide Bank, home loan affordability has extended further into "stressful" territory.

The report assumes that 30 percent or less of household income is spent on mortgage repayments. Sydney is the most expensive place to live in Australia, with people living in the New South Wales capital needing to earn at least $154,482 before tax just to pay the mortgage. Price data is based on the CoreLogic RP Data measured median house price of $840,000, with even more money needed within 20km of the CBD. Data for units was also released, with Sydneysiders needing to earn slightly less per year at $115,000 to pay off an average apartment.

Surprisingly, Melbourne is not the second most expensive place to pay off a mortgage in Australia, with the Victorian capital edged out by both Canberra and Darwin. The median house price in Melbourne is just $575,000 according to CoreLogic RP Data, meaning that Melbournites can avoid mortgage stress with an annual income of $104,666 or more. An income of $106,666 is needed to comfortably afford a house in Canberra, with $105,792 required for a stress-free life in Darwin. ; ;

According to Jessica Darnbrough from Mortgage Choice, “Obviously Sydney is incredibly expensive so it didn’t surprise me to see that people need a household income of $150,000 plus in order to comfortably service a home loan... It was interesting to see the results of places like Darwin. They might not have seen such stellar growth over the last 12 months, but obviously prior to that they’ve enjoyed some great growth. That’s obviously reflected in the ave ; ; rage income needed to service their loans.”

Perth is next on the list, with a median house price of $550,000 requiring an income of $101,149 each year. Apartment prices in Perth are significantly less expensive at $435,000, meaning just $80,000 is enough to service an average mortgage. With five Australian capitals requiring an income over $100,000 to avoid mortgage stress, only Brisbane, Adelaide, and Hobart residents are able to get by on less. Brisbane homeowners need to earn $89,655 to pay off a median mortgage of $487,500, followed by $77,241 in Adelaide and $64,827 in Hobart.

According to separate data released by the REIA in combination with Adelaide Bank, housing affordability has extending further into "stressful" territory. The percentage of income required to meet median loan repayments increased by 1.4 percent over the quarter to 31.7 percent, with the finance industry considering everything above 30 percent to be stressful and possibly unsustainable.

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