Double trouble: Income needed to buy a home has skyrocketed

Homehunters need to earn twice what they did just four years ago to afford to buy a house in Hobart. SEARCH YOUR SUBURB

Finder research has shows just how much more income people need to afford a house in Hobart. Picture: Supplied

GREATER Hobart househunters need to have secured an eye-watering wage increase since Covid’s onset to be able to afford an average house.

Research by comparison site Finder has revealed the salary required to buy a typical Hobart house in 2020 without falling into mortgage stress was $67,837.

Today, this figure has more than doubled to $138,212 — a $70,376 earnings increase.

The sharp increase is higher still in Hobart’s most expensive suburbs, where six areas now require a salary well over $200,000, led by Battery Point at $266,552.

Compared to 2021, some of these suburbs — like Tranmere, Sandy Bay or Acton Park — need a $100,000 income increase for people to buy the same median-priced house today as they could have afforded a few years back.

By percentage, Tranmere buyers need the largest salary rise, 136 per cent, as the minimum income needed in 2021 was $102,952 and is now $242,859.

Carlton and Sorell buyers need 115 per cent more, Gagebrook 111 per cent, and Seven Mile Beach 110 per cent.

New Norfolk, Rokeby, Berriedale, Mornington And Acton Park’s income increase were in the 101-102 per cent range.

Finder head of consumer research Graham Cooke said the data revealed an enormous blow for first homebuyers.

He said the analysis of PropTrack data showed that spending power had halved since 2020 — a “dramatic change”.

“The analysis shows that for many suburbs, homeownership is a vanishing dream,” he said.

Finder’s head of consumer research Graham Cooke.

“Property prices and the cost of debt are significantly outpacing wage growth, and as such, affordability has slipped even further out of reach compared to 2020. Unless they switched careers or had a huge change in circumstances, few people’s income would have risen at a rate that could match this.”

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PropTrack economist Paul Ryan said housing affordability has deteriorated at an alarming rate.

“We’ve gone from what was probably one of the best times for affordability in 2020 to the worst in the space of four years,” he said.

Mr Ryan said relative macroeconomic stability has underlined home pricing.

“The number one thing that affects someone’s decision to buy a home is their job prospects,” he said.

“For most people, they have been strong. That’s made them more confident to make long-term house decisions.”

Mr Cooke added that it could take years until housing affordability improves.

“It’s unlikely property prices will drop by more than a slight dip. Relief would depend on interest rate cuts and wage increases, and it’s probably quite far away. When it comes, it will be gradual.”

Tranmere homes priced around the suburb’s median tend to be sleek, modern and impressive, such as the recently sold No.5 Ardilletta Rd.

Mr Cooke said buyers don’t want to spend more than 30 per cent of their income on mortgage repayments, and should consider whatever schemes and incentives are available to help them get into the market.

“Once you do take the plunge into buying a home, your mortgage is likely to be your biggest expense,” he said.

“Make sure you shop around for the most competitive rate on your home loan.”

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Meanwhile, separate PropTrack figures show how much longer it takes to sell a Tassie home now compared to last year and 2022.

In July figures, Hobart home sales have stretched from lightning fast in 2022, 11 days on the market, to 43 days. That is a 291 per cent downshift.

At this time last year it was 35 days, a 23 per cent year-on-year slowdown.

A number of agents contacted by the Mercury described the current market as “tough”, “challenging” or a “proper winter market, which we haven’t seen for a few years”.

Others said the right house, marketed well and priced well will “always attract buyers”.

“We are doing a lot of spring appraisals at the moment,” an agent said.

Originally published as Double trouble: Income needed to buy a home has skyrocketed