Real estate: How much you need to earn to buy home in every Sydney suburb

A new study has revealed how much you need to earn to afford a home in each Sydney suburb, showing what kind of budget you need to be “above average”. See the full list of suburbs

Home seekers earning less than a quarter of a million dollars a year can no longer afford to buy properties in nearly two thirds of Sydney following the fastest interest rate hikes in a generation.

And those with a household income of less than half a million dollars a year will be unable to afford houses in about 140 suburbs, or nearly one in five Sydney suburbs, exclusive analysis has revealed.

The Finder.com.au study examined the minimum income buyers required to afford an average priced unit or house in each suburb, laying bare the devastating impact of recent interest rate hikes.

Emily and Chad Ballinger, with son Archie, at their Wentworth Point apartment they are selling up to upsize in the Hills district. Picture: Adam Yip

The findings suggested Sydney houses may now be unaffordable for even some high income earners, considering $239,000 a year marks the 90th percentile for Australian household income.

About 58 per cent of the Greater Sydney geographic area had a median house price deemed unaffordable for buyers with a 10 per cent deposit and income below $250,000 a year.

Apartment prices were considered unaffordable for buyers on less than $250,000 in 21 per cent of Sydney suburbs.

Finder head of consumer research Graham Cooke said it showed home ownership was slipping out of reach of new buyers faster than even during previous housing booms, when prices were soaring.

He pointed to the dozen rate hikes over the past year, which have reduced buyers’ borrowing capacity by about 30 per cent, and recent price increases, as having a devastating effect on affordability.

“Every time the cash rate goes up, the first rung of the property ladder gets higher,” Mr Cooke said.

“We’ve now had 12 increases … the number of suburbs where you need to earn $500,000 a year (to buy) is alarming.”

The analysis provided income estimates for buyers using both a 10 and 20 per cent deposit. It assumed the buyer paid an interest rate of 6.18 per cent – the current average loan rate for new buyers – and did not spend more than a third of their income on mortgage repayments, avoiding “mortgage stress”.

About 58 per cent of the Greater Sydney geographic area had a median house price deemed unaffordable for buyers with a 10 per cent deposit and income below $250,000 a year.

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Homebuyers with an income below $100,000 a year had few options, with only 22 considered affordable for those with a 20 per cent deposit and about half that affordable with a 10 per cent deposit.

Buying a median priced apartment in Sydney’s cheapest suburb, Carramar in the southwest, required a minimum income of $76,000 if using a 20 per cent deposit and $86,000 if using 10 per cent.

At the other extreme, there were 35 suburbs where buyers with a 20 per cent deposit needed a household income of $750,000 or more, including nine requiring a $1m a year income.

PropTrack director of economic research Cameron Kusher said a higher than average income alone was often not enough to purchase in some of Sydney’s most popular areas.

He added that most house buyers in regions such as the north shore, northern beaches and eastern suburbs relied on substantial equity from previous properties to fund their purchases.

Others used money from their parents to get into the housing market, Mr Kusher said. “There is a huge amount of generational wealth in Sydney and that has kept prices higher,” he said.

High income requirements for property purchases were not restricted to the eastern suburbs and coastal regions.

Sydney has one of the worst housing shortages in the developed world.

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Suburbs where house buyers with both a 10 or 20 per cent deposit required a high household income – at least $350,000 a year – to afford a median priced house were spread all across the city.

They included Baulkham Hills, Kellyville and Beaumont Hills in the northwest, Londonderry in the outer west, Newington in the Parramatta region and Hornsby in the far north, according to Finder.

Other suburbs where property ownership required the same high minimum income were traditional blue collar areas, including Arncliffe, Belfield and Bexley North in the southwest.

Ray White economist Nerida Conisbee said the seemingly insurmountable gap between people’s incomes and housing costs was primarily because of underbuilding, coupled with sluggish wage growth.

She noted Australia, and Sydney in particular, had one of the worst housing shortages in the developed world.

“We’re simply not building enough housing in the places where people want to live and that’s pushing up prices,” she said.

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“Infill development has been a problem too. A lot of the units are one-bedroom or two-bedroom with limited appeal for families or downsizers. We need more large, three bedroom units.”

Wentworth Point resident Emily McCoy said she realised the scarcity of family-friendly units at affordable price points when shopping for her current apartment four years ago.

“We were extremely lucky to get a unit with three bedrooms that’s across the road from a children’s park and near a pool,” she said.

McGrath-Strathfield agent Ania Aquino said there was an “extreme” shortage of properties up for sale at the moment and this was putting new pressure on buyers.

Ms McCoy and partner Chad are now selling their Wentworth Point unit on Amalfi St to move to the Hills district.

“There is no way we could buy a house in that area without first having the apartment,” she said. “You just can’t do it from scratch anymore.”