The average household income of Australian homebuyers has increased by 40 per cent to over $200,000 in just four years, leaving single borrowers with less choice.
Investment Bank Jarden’s analysis of Commonwealth Bank mortgage data found that almost a third of all home loan applicants earned $220,000 in 2023.
That’s a big jump from 2019, when the median homebuyer household income was $160,000.
Average house prices have risen across Australia despite aggressive rate hikes, with $1.6 million the average price in Sydney, compared to $1.05 million in Melbourne, $888,285 in Brisbane, $875,034 in Adelaide and $742,390 in Perth, sales data shows from Domain.
The The average full-time salary is now $98,098, putting a $700,000 home beyond the reach of a single borrower.
Carlos Cacho, Jarden’s chief economist, said the data is worrying because it shows that “the average household can no longer buy the average house in a capital city.”
“What we’ve seen over the last four years or so is that the share of middle- and lower-income buyers has gone from 30 percent to 18 percent,” Cacho told Domain.
‘It is a market that is increasingly driven by households with higher incomes and large deposits.
Investment Bank Jarden’s analysis of Commonwealth Bank data found that almost a third of all home loan applicants earned around $220,000
Homebuyers earned 40 percent more of their median household income in 2023 than they did in 2019 (pictured is an auction in Melbourne)
‘It is a situation in which there is a real split between asset and income boundaries. It will become a situation where the average household can no longer buy the average home.’
Mr Cacho added that this trend could fatally damage the Australian dream of working hard and owning a home.
“It was generally believed that if you tried and really applied yourself, you could achieve it, regardless of your starting point,” Mr Cacho said.
“But now it’s very difficult to buy a house unless you come from a family that owns a house or has some assets.”
A RateCity analysis found that banks now only lend borrowers 5.2 times their pre-tax salary if they have a mortgage deposit of 20 percent.
That means an individual or couple would have to earn $214,000 to afford even a $1.4 million home, thus paying off a $1.1 million mortgage.
An average income earner with an income of $98,000 would only be able to buy a $639,375 home and borrow $511,500.
Jarden chief economist Carlos Cacho (pictured) said housing affordability in Australia was ‘broken’, with the data showing the ‘average household could no longer buy the average home’
Mr Cacho said it is difficult to “shift the affordability curve” and that buying a house is unlikely to become more affordable in the near term.
“It’s just broken,” he said.
‘Affordability will improve slightly if and when we see a rate cut from the RBA, but history shows this is likely to push house prices up even further.’
House prices in the Australian capital rose 11 percent to $944,229 in the year to January, data from CoreLogic showed.
This happened despite the Reserve Bank raising rates for the 13th time in 18 months in November, taking the cash rate to a 12-year high of 4.35 percent.
A net of 518,000 migrants moved to Australia in the period 2022-2023.