Average wage earners priced out of the Gold Coast

Households on an average income have officially been priced out of buying a home on the Gold Coast. Here’s what you need to earn to buy in every suburb. SEARCH THE INTERACTIVE

Average wage earners have been priced out of the Gold Coast

HOUSEHOLDS earning an average income have been priced out of buying a home on the Gold Coast, as housing affordability spirals on the back of steep rises in living costs.

Exclusive new data shows minimum earnings of $141,000 were required to afford the average Gold Coast home, while that figure soars to $200,000 or more to buy in two-thirds of the city’s suburbs.

The figures from loan comparison site Finder show wages of more than $400,000 were needed to buy in Mermaid Beach, while household income of $400,000-plus applied to purchases in Surfers Paradise, Clear Island Waters, and Tallebudgera Valley.

Income between $300,000 and $400,000 was needed to buy in another 13 local suburbs, from Palm Beach to Paradise Point and including beach and Hinterland spots.

Affordability had deteriorated sharply across Queensland, with a $100,000 minimum wage buy-in for twice the number of suburbs than nine months ago. In January, homebuyers in the Coast’s most expensive market of Mermaid Beach needed a salary of $342,728 — that amount has surged by almost 50 per cent in less than a year.

It comes as the Reserve Bank hiked rates for the seventh consecutive month this week by 25 points to 2.85 per cent, while local suburbs notched up huge annual price growth.

Home values were up between 20 and 35 per cent in each of the top ten suburbs over the past year.

Finder head of consumer research Graham Cooke said the analysis of home price and loan data painted a grim picture for prospective homeowners.

Finder’s research assumed the buyer purchased at the median price, was financed at an average loan rate of 5.95 per cent, and spent less than a third of their income on repayments in order to avoid “mortgage stress”.

Average income earners have been priced out of buying a home on the Gold Coast

Tax office and Australian Bureau of Statistics data put the state’s average household income at about $105,000 per year.

“The costs of living are increasing faster than people’s salaries and housing is the biggest component of that. A lot of households are struggling,” Mr Cooke said.

“Australia escaped the global financial crisis to a degree, so this is really the first time it’s in this kind of situation.

“These figures may be pretty shocking to some, with the average price increase across all suburbs sitting at 13 per cent. This has added thousands of dollars to the average salary required to afford a home in most cases,” he said.

First-home buyers, along with those whose fixed term loans expired in the next 18 months, were most at risk of soaring repayment costs.

“Those who are buying their next home often have a bigger deposit and having that bigger deposit also gets them a lower rate,” Mr Cooke said.

Finder head of consumer research Graham Cooke

“First-home buyers usually have more debt. The rate rises will hit them really hard. The balance to this is that prices are falling, but it depends a lot on the suburb you are looking at.”

Buyers agent Matt Srama said many first-home buyers had “tapped out” of the market as interest rates crept up, leaving opportunity for those with the means to do so to, “buy in isolation”.

Mr Srama advised first-home buyers to take stock of discretionary spending and medium-term plans to ensure they could service their loan if their family or employment situation changed.

“More first-home buyers are looking at alternative options to climb the property ladder, like rent-vesting which allows people to live and rent in the location they want, but still put their hard-earned money to a strong asset like property, in an area that’s growing at a faster rate but where the buy-in is less,” he said.

“First-home buyers sometimes get into the blurred vision of needing the forever home straight away, but by talking to a finance professional you can look at different ways to reach those goals.

“I’m also seeing a lot more guarantor loans where buyers get help from a family member as a way of getting into some of the more expensive suburbs.”

The research found affordability had declined sharply over the last nine months

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Lance Goodman, CEO of personal finance marketplace Compare Club, said refinancing home loans became more difficult with each rate rise.

“This cash rate increase will be significant for many homeowners who took advantage of cheap loans two years ago,” Mr Goodman said.

“People who got an ultra-low 1.79 per cent mortgage in 2020 will be moving onto a much higher variable rate and will be looking to refinance.

“The problem for these homeowners is that any cash rate increase in November takes them past their initial serviceability buffer,” he said.

First-home buyers were hard hit

Ray White Hope Island agent Thomas Fliniks said downsizing homeowners and those transacting in the higher price brackets were shielded from affordability challenges.

“For properties priced north of $1m, the market is conducive to sellers and buyers who are ready to rock and roll,” Mr Fliniks said.

“Good properties are still demanding good prices, as long as owners are listening to the market rather than following the dark path of throwing a price on their property and hoping for the best.”