Doubled in 4 years: salary you now need to afford home in each suburb

Buying an average Sydney home now requires twice the income it did at the start of the pandemic. See how much you need to earn in your area to buy at current rates and prices.

Sydney home seekers will need to earn double what they did four years ago to be able to afford an average city house, alarming price and lending data analysis has revealed.

The study has laid bare the devastating toll of explosive home price rises and interest rate hikes since the pandemic, with the annual salary needed to afford an average priced house rising by $150,000.

Home seekers now need to earn about $278,000 a year to afford the repayments on a median priced house at the average loan rate, according to the Finder.com.au analysis of PropTrack data.

This is a 115 per cent increase on the $130,000 a year income needed in 2020 to afford a median priced house at the typical mortgage rate lenders were charging at the time.

ABS figures showed national wages have grown by about 12 per cent over the same period.

The salary required to buy in certain pockets of Sydney has become even more extreme, with buyers needing an annual income of over $700,000 to afford the average prices in 66 suburbs.

Finder head of research Graham Cooke said house buyers’ purchasing power was effectively half what it was at the start of the pandemic.

The change was so drastic because of the “double whammy” of higher interest rates and rising property prices, he said.

A typical interest rate back in July 2020 was 2.92 per cent while the median house price was $970,000.

The average loan rate for owner occupiers has since grown to 6.27 per cent, while the median house price in July 2024 was $1.4m.

“In many locations you need to be earning double what you did four years ago. That is a dramatic change,” he said.

“Unless they’ve switched careers or had a huge change in circumstances, few people’s income would have risen at a rate that could match this.”

The Finder analysis assumed the buyers used a 20 per cent deposit and wanted to avoid mortgage stress – a situation where households spend more than a third of their gross income on repayments.

It also factored in the average variable rate being charged by lenders in 2020 and 2024 for a 30-year mortgage. The research did not factor in other homeownership costs like council rates.

Landing a foot on the property ladder was easier for unit buyers, but they still needed a substantial change in income to keep up with repayment costs, the analysis showed.

Those buying a unit needed to earn about $57,500, or 60 per cent, more than they did in 2020 if purchasing at the median price.

Most of the increased cost for unit buyers was due to interest rate hikes, with the median price of apartments changing from $715,000 in 2020 to the current $775,000.

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Mr Cooke said there were harmful social implications for the rising income requirements of buying a home.

“It further emphasises how many people will rely on the bank of mum and dad to get into the market. If you were born into a family with less property wealth, buying might just be a pipe dream.

“We are looking at an increased division in society between those with property privilege and those watching the bottom rung of the property ladder go up and up faster than they can catch up.”

McGrath Estate Agents’ Simon Nolan said most of the people who could afford properties in some of Sydney’s pricier regions were only able to buy the properties because they had property wealth.

“They’re typically third or fourth home buyers,” he said. “The majority of their money comes from their existing properties. They’ve been trading up for years and might only borrow 50 per cent of the value.”

5 Tahlee Street, Burwood, NSW recently sold for $5m. NSW real estate.

Phillip Bay resident Mariusz Sliwinski said he was frustrated with the lack of affordable options in Sydney and wanted to move to the Gold Coast after selling up his townhouse on Elaroo Ave.

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“Everything is just crazy,” he said. “We just don’t have the budget to get the kind of house we need.

“It’s a catch 22. The houses we can afford around here are not suitable for the size of our family but further out suburbs where we could get something bigger don’t have the lifestyle we want. They’re just too far away.

“The only way we can keep our lifestyle and get a bigger family home is to move to Queensland.”

PropTrack economist Paul Ryan said housing affordability was relatively good in 2020 but dropped to the worst on record in the space of four years.

National home price rises over the past four years were well above historic trend, growing about 24 per cent faster each year than over the years from 1986 to 2019, Mr Ryan noted.

“Supply chain disruptions for builders, plus the cycle of population growth, have contributed to strong demand relative to supply,” he said.

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“We’ve (also) had relative macro-economic stability. The number one thing that affects someone’s decision to buy a home is their job prospects. For most people, they have been strong. That’s made them more confident to make long-term house decisions.”