Map: The Salary You Need to Buy In Each Australian City
If you’re looking for proof that Australia’s housing market is truly outrageous, this is it.
We’ve crunched the numbers to determine the annual salary needed to purchase the median-priced home in each of Australia’s capital cities, as well as in several inner city suburbs. The results may surprise you.
Where can you afford to buy?
Our research suggests homebuyers need an annual salary of $73,500 to buy the median-priced home in Australia.
That’s in line with Australian Bureau of Statistics data that shows the average Australian earns just under $80,000 each year, though this figure is heavily skewed by a small number of high income earners.
While the national median house price and the average Australian annual earnings seem to add up, there’s a problem. The national median house price does not accurately reflect how much it costs to buy in some of Australia’s most in-demand locations.
As you can see from the map below, the annual salary needed to purchase a median-priced home varies from city to city.
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The map shows, for example, that the average homebuyer has been all but pushed out of Sydney’s property market. How many individuals do you know who earn more than $106,000 per year?
What the map doesn’t show is that median house prices can also differ greatly between neighbouring suburbs.
How we did the maths
Before we dissect the findings in detail, it might be useful to explain how we came up with the numbers.
Our calculations assume that a homebuyer:
- Is single
- Has no dependents
- Puts down 20 per cent deposit on a 25-year loan at an interest rate of 5.0 per cent (plus a buffer of 1.5 per cent)
- Has annual expenses equal to $17,907, which is the Melbourne Institute’s definition of the poverty line
- Devotes all after tax income (beyond the $17,907) to loan repayments
We then researched median capital city and suburb house prices using Core Logic and realestate.com.au data, and used an online borrowing calculator to determine how much a buyer would need to borrow to purchase the median-priced home in each location.
This sum was adjusted to reflect the assumptions outlined above.
Australia’s most affordable capital cities are…
Hobart, Adelaide, Brisbane and Perth are the most affordable Australian capital cities for homebuyers.
To purchase the median-priced homes in these cities, homebuyers need an annual salary of less than $66,500. If you’re interested in moving across the Bass Strait and buying the median-priced home in Hobart, you’ll need an average annual salary of just $49,000.
Median house price: $347,000
Salary required: $49,000
Median house price: $430,000
Salary required: $57,100
Median house price: $487,000
Salary required: $62,900
Median house price: $525,000
Salary required: $66,500
Melbourne, Canberra and Darwin more expensive
Unfortunately, not all Australian capital cities are as affordable as Hobart.
As you might expect, Canberra and Melbourne are at the higher end of the scale, with median-priced homes in these cities requiring annual salaries of $73,300 and $75,400 respectively.
Darwin, propelled by large-scale mining and infrastructure projects, isn’t far behind. Homebuyers need an annual salary of $72,500 to buy in Australia’s most northern city.
Median house price: $585,000
Salary required: $72,500
Median house price: $590,000
Salary required: $73,300
Median house price: $615,000
Salary required: $75,400
Sydney – if you’re not on a six-figure salary, look elsewhere
With houses regularly selling for over $1 million, it will surprise few that Sydney has some of the least affordable homes in the country.
Homebuyers need to earn at least $106,000 to afford Sydney’s median priced home – and a lot more if they want to buy in more prestigious suburbs.
Median house price: $900,000
Salary required: $106,000
Pay extra for top locations
You already need a six-figure salary to afford the median-priced home in Sydney. But if you thought that was out of reach for most Australians, wait until you hear how much it costs to buy in the inner city.
Melbourne homebuyers need to be in the second-highest tax bracket or above (earning at least $138,200 per year) to afford the median-priced home in inner city suburbs like Fitzroy.
In Sydney, homebuyers need an annual salary of $235,000, or over three times the average annual Australian wage, to afford to buy the median-priced home in Bondi Beach.
And that’s not the worst of it.
Prospective homeowners need an annual salary of $1,169,000 – over fifteen times the average salary – to afford the median-priced home in Point Piper.
To put that into perspective, fewer than 0.1 per cent of Australians make more than $1,169,000 per year. In fact, someone at the lower end of Australia’s top 0.1 per cent earns just $600,625. That’s over $550,000 short of what’s required to afford for the median-priced Point Piper home.
Australia’s priciest hipster suburbs
9. Redfern, NSW
Median price: $1.18 million
Salary required: $135,200
8. Forest Lodge, NSW
Median price: $1.181 million
Salary required: $135,200
7. Fitzroy, VIC
Median price: $1.206 million
Salary required: $138,200
6. Camperdown, NSW
Median price: $1.26 million
Salary required: $143,900
5. Surry Hills, NSW
Median price: $1.33 million
Salary required: $152,500
4. Chippendale, NSW
Median price: $1.33 million
Salary required: $152,000
3. Darlinghurst, NSW
Median price: $1.43 million
Salary required: $162,000
2. Bondi Beach, NSW
Median price: $2.002 million
Salary required: $235,000
1. Point Piper, NSW
Median price: $9.4 million
Salary required: $1,169,000
- Nationally, homebuyers need to earn an annual salary of at least $73,500 to afford the median-priced Australian home.
- Sydney remains the most unaffordable city for the majority of Australians. To buy the median-priced home in Point Piper, for example, a homebuyer needs to earn upwards of $1,169,000 per year.
- Melbourne is far more affordable than Sydney, with an annual salary of $75,400 required to purchase the median-priced home. However, buying in an inner city suburb such as Fitzroy requires almost double the salary ($138,200).
- Hobart is the most affordable city, with a median house price of just $347,500
- Compared to Hobart, Sydney homebuyers need to earn over $55,000 more per year to afford a median-priced home.
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