What career path you follow could determine where you live, and what type of home you can buy, as Australia’s property prices continue to soar and affordability tumbles.
New research conducted by CoreLogic comparing national dwelling values and average incomes demonstrated that low income workers are only able to afford 17.6 per cent of available housing stock in Australia – or just 2.9 per cent in Sydney and 4.2 per cent in Melbourne.
Not only are low income earners restricted from freely choosing where they want to live, but are left out of accumulating wealth through homeownership, according to Effie Zahos, money expert and editor-at-large for financial comparison site Canstar.
“Property is basically the number one asset vehicle for most Aussies to actually build their wealth, and this is why we have a lot of gender discrepancy in wealth too,” she said.
Canstar calculated how much an Australian needs to earn to afford a modest home in each capital, and concluded that buying a home then maintaining a loan in more than half of our cities would plunge home buyers on average salaries into mortgage stress.
“It really does put things in perspective as to how hard people are fighting to actually get into this asset class since it’s experienced such ridiculous growth over the past couple of years. It’s surprised everyone,” she said.
On the flip side, CoreLogic’s study showed that top earners can afford a whopping 85.1 per cent of Australian homes including 93 per cent of all units and 82 per cent of houses.
The analysis used household incomes modelled by the Australian National University including low (25th percentile), middle (50th percentile) and high (75th percentile) income estimates to September 2020, which amounted to weekly income estimates of $905, $1654 and $2760 respectively.