Three in four properties in Sydney and half in Melbourne are only affordable for the highest earning 20 per cent of first home buyers.
That’s based on analysis by the National Housing Finance and Investment Corporation, which looked at both first-home purchase and rental affordability around Australia. It differs from other housing analysis because it looks at affordability by income segment rather than assuming an average or median income.
Affordability was defined as rent or mortgage repayments costing no more than 30 per cent of household income, taking into account both property prices and interest rates. For the analysis, first-home buyers were defined as people aged 24 to 39 who are currently renting.
Nick Langley recently bought an apartment with the help of his parents.Credit:Renee Nowytarger
If housing affordability perfectly matched incomes, the bottom 20 per cent of households by income would be able to rent or buy 20 per cent of homes, middle earners would be able to afford half the homes, and the top 20 per cent would be able to afford 80 per cent to 100 per cent of properties.
However, the only Australian capital cities that came close to this were Perth and Adelaide, while regional Western Australia and South Australia had a wide range of property available for most income groups. Hobart and regional Tasmania were among the least affordable markets in Australia relative to local incomes.
In Sydney, 60 per cent of first-home buyers can afford fewer than 10 per cent of properties. In Melbourne this rises to about 20 per cent of properties.
Nick Langley, 32, recently bought a two-bedroom flat, in an older-style block of six in Summer Hill in Sydney’s inner west, for between $650,000 and $700,000.
The local government worker said he earns an above-average income in the high five-figures and had been saving diligently for seven years, but he would not have been able to afford to buy anything without family money.
“There is absolutely no way that somebody on my comfortable income could afford that without help,” Mr Langley said. “The reality is that my mortgage payment is not that much more than my rent was, but getting a deposit together of $100,000 is pretty unrealistic for most people in their 20s or 30s while they’re paying $300 or $400 a week in rent.”
