Revealed: Where you can afford to buy a home on your income in Adelaide

Shocking new data reveals low-income earners are now shut out of half of Adelaide’s suburbs. But our new tool homes in on where you can still find an affordable place.

Househunters Macey Gibbs and Hannah Tippett search for somewhere to buy. Picture: Matt Loxton

More than half of Adelaide’s suburbs and towns did not have a single property available for sale within the budget of low-income earners in May, new data shows.

According to a CoreLogic market snapshot for mid-May, of the 460 Greater Adelaide suburbs or towns, 260 of them had not a single house within reach of a low income earner.

In stark contrast, there were 155 suburbs where every single home for sale was within reach of high-income earners.

There were just 22 suburbs where every house on the market at the moment of the data capture was within reach of middle-income earners.

CoreLogic head of research Eliza Owen said combined values have surged to record highs across Sydney, Melbourne and Adelaide, leaving income growth behind.

“The implication is that housing may become less affordable when basing borrowing capacity on incomes alone, and more than income is needed to keep up with the housing market.”

The data is based on household incomes modelled for the Greater Adelaide region by the Australian National University Centre for Social Research and Methods.

It determined a low income earner to earn $765 per week or less, a high income earner to make at least $2405 per week and a middle-income earner to bring home $1438 a week.

An estimate of borrowing capacity at these levels was made based on a 30-year loan term with an interest rate of 2.4 per cent and repayments based on a 30 per cent share of income.

Ms Owen said first homebuyers were far more sensitive to price changes, with many now finding themselves priced out of the market.

“The latest ABS lending data suggest financing for first home buyers has declined by 4.8 per cent over the past two months.

“Another reason is that as prices increase faster than incomes, it is harder to accumulate a deposit, where our analysis assumes the buyer has a 20 per cent deposit.

“The past few housing booms in Australia have also given rise to terms like ‘rent-vesting’, ‘the bank of mum and dad’ and ‘fractional investing’, which highlight alternative methods first homebuyers have turned to in order to access the housing market as prices rise.

“Despite these alternative measures, 2021 is likely to see a decline in first homebuyer numbers.”

At the time of the data capture, there were four suburbs where every unit on the market was within reach of low-income earners – Dry Creek, Elizabeth Downs, Evanston and Hackham West.

Harcourts Packham director James Packham said the market was going through an interesting time.

“During May, Adelaide house prices continued their meteoric rise, with a 2.2 per cent increase on April,” Mr Packham said.

“Auction continues to be a popular method of sale, with the auction clearance rate firmly planted above 90 per cent most weeks.

“The level of stock coming to market is still lower than what we would usually see, placing upward pressure on prices.”

Mr Packham said most buyer interest this year has been driven by owner-occupiers, but over the past few months, investors have returned to the fray.

“Investor loan approvals have climbed over 12 per cent since February, building off a low base after the challenges of 2020.”

Friends Hannah Tippett and Macey Gibbs are considering buying a house but Ms Tippett said she might be looking for a while as the market is currently overheated.

“I feel like it’s a tighter market because the price ranges have been blown out of the water,” Ms Tippett said.

“I’d like to own my own place but I’m pretty chilled with renting for quite a while while I save.”