Suburbs now affordable for homebuyers earning $70,000
With some suburbs now within reach of those on as little as $70,000, here’s the rundown on what you need to earn to live in your suburb of choice. USE OUR SEARCH TOOL
QLD News
Don't miss out on the headlines from QLD News. Followed categories will be added to My News.
Suburbs once out of reach for Brisbane’s low and middle-income earners have become affordable in a rare silver lining to the COVID-19 crisis.
Houses in 15 suburbs have become affordable for households on an annual salary of less than $70,000 at the cheapest loan rate on the market, whereas back in March, a yearly income of $100,000 was needed to afford the mortgage repayments at an average rate of 4 per cent.
Finder.com.au analysis of property prices and mortgage data from CoreLogic reveals the change is largely due to falls in property prices and drops in lender rates since the pandemic took hold.
The research reveals the cheapest loan rate currently on the market is just 1.95 per cent, whereas the average rate offered by the banks in March was 4.04 per cent, and home prices have dropped by an average of about 2 per cent over the past three months.
The analysis also shows a salary of just above $20,000 could be enough to get into the Brisbane housing market, with Russell Island and Riverview in Ipswich affordable on an annual income of between $20,000 and $25,000.
A salary below $70,000 is now enough to afford a typical house in Wynnum, Calamvale, Mount Gravatt East and Everton Park.
And at the top end of town, an annual household income of $208,820 is needed to afford the loan repayments on a house in Brisbane’s most expensive suburb of Teneriffe — and that’s at the cheapest rate on the market of 1.95 per cent.
The data was compiled for houses and units based on buying at the suburb’s median price, using an 80 per cent deposit, using either the lowest rate on the market or the average rate offered by the big banks and spending less than 30 per cent of income on loan repayments — a common stress test banks use to measure serviceability.
Finder.com.au insights manager Graham Cooke said the research showed many suburbs once unattainable for lower-income and middle-income homebuyers had become affordable again.
“The door is open for lower- and middle-income buyers — with the combination of lower rates and cheaper prices, now is the time to be looking,” Mr Cooke said.
Lenders were offering rates that would have been unthinkable only a few years ago, Mr Cooke added.
“We are seeing the first sub-2 per cent rates appear in the market, with one 1.95 per cent product available nationally, and many others in the same ballpark,” he said.
“The average variable rate across the big four banks is around 4 per cent, this shows how much value there is in the market.”
Home seekers — particularly first homebuyers — would have plenty of time to capitalise on the low rate environment and government support such as stamp duty incentives was sweetening the deal, Mr Cooker said.
“With the cash rate at an all-time low and not likely to budge in the foreseeable future, there has never been a better time for borrowers to reduce their repayments or for first-time buyers to get on the housing ladder,” he said.
“While the big banks can offer discounts to high-value customers and charge a hefty package fee, many small lenders offer low rates with no hidden extras.”
“Not only that, but the price drops we are seeing in the market now will make homes even more affordable in some suburbs.”
Realestate.com.au chief economist Nerida Conisbee said buyer inquiry levels suggested more home seekers saw it as a good time to be purchasing property.
Inquiry levels were up about 70 per cent nationally since March, she said.
“First homebuyers have been particularly active,” Ms Conisbee said.
“If you have a job and are confident in your employment now is a good time to be buying because rates are incredibly low and there is little chance they will be rising for years given we are in a recession.”
Prices have been falling in many areas since the COVID-19 crisis began but could fall further, which would encourage further first homebuyer activity, Ms Conisbee said.
Government incentives were also giving new buyers a boost, she said.
“Every announcement has been followed by a spike in inquiry levels, it is getting more buyers into the market.”
“Banks are generally more cautious at the moment but they are still lending provided you have stable employment.”
“It’s mostly the investors who are struggling to get financing … that’s another benefit for first homebuyers because they often compete with investors for the same stock.”